Keeping the foodservice equipment marketplace up to date with the latest menu and concept trends.


It’s Back to Business for B&I Foodservice

As the economic environment continues to improve, the outlook for business and industry foodservice begins to look a little brighter. Just like other foodservice segments, though, providing a high-quality product that does not compromise speed of service represents a defining attribute among the successful operators.

Microsoft-Corp-CommonsThe troubled economy has created a great deal of fallout, including restaurants downsizing or shutting their doors altogether, and like their peers in other parts of the foodservice industry, business and industry operators have endured their fair share of challenges. The good news is that in the last year things have begun to improve.

Business and industry (B&I) foodservice sales topped $7 billion in 2001, according to Technomic, a Chicago foodservice market research firm. Since 2009, however, this number has hovered around $6 billion annually. The good news is that the decline in sales in this segment has finally leveled off.

"Just 12 months ago, companies were cutting back," says Russ Benson, vice president of the hospitality group at Food for Thought Enterprises, a Chicago-based hospitality group that provides contract services for the B&I segment. "In the last six months, we've just started to see companies getting back to the notion that on-site foodservice really is a people productivity enhancer."

Though footprints may be smaller, U.S. companies have made a philosophical switch. Many firms now reinvest in foodservice programs by enhancing, rather than enlarging, what is already there. "The pendulum is shifting back to what it was 10 or 20 years ago," Benson says. "Most of our restaurants are either undergoing a renovation or will be renovated this year."

Experts estimate that contract feeders run approximately 95 percent of all B&I foodservice operations. Generally speaking, these relationships use one of two types of contracts: cost-plus-fee, where the client takes on all of the financial risk, or profit-and-loss (P&L), where the contractor takes on all of the risk. The industry is loaded with numerous variations on these two formats, with some covering other services, such as vending, office coffee and conference center management. When a contractor also provides non-foodservice-related functions, such as janitorial or laundry services, separate contracts typically apply.

"Companies may heavily subsidize foodservice to enhance productivity," Benson says. "But a building of 500 workers that is subsidized is totally different than a building that operates under a P&L." He estimates that about 60 percent of B&I programs feature some type of subsidy from the company. In fully subsidized operations, the owner reimburses the contractor for monthly losses. With a modified subsidy, the rent, utilities and operating overhead costs may be absorbed. "The bigger the building, the more risk the operator takes on," Benson says.

The general rule is, as a company's population grows, the need for foodservice increases. These needs directly correlate to the number of employees. A smaller company, say one with less than 500 workers, may only need or have space for a vending operation and/or coffee kiosk with grab-and-go items. Businesses servicing more than 500 employees are more likely to provide an on-site restaurant.

Visits made to B&I operations have dropped by more than 25 percent since 2007, with about 40 percent of traffic declines attributed to the morning meal and 40 percent to lunch, according to the NPD Group/CREST September 2011 year-end report. The age of employees is increasing, as well, with 35- to 49-year-olds representing 40 percent of the traffic and those 50 and older accounting for 35 percent.

B&I customers typically have higher expectations for variety, pricing and speed of service when compared to other noncommercial operators such as schools or hospitals. One challenge that all of these segments share, though, is the need to recruit and retain high-quality labor. "Even with high unemployment, finding a quality worker with the appropriate skill set to work in these operations can be difficult. As a result, we always seem to be understaffed," Benson says.

For the most part, the trends in this segment mirror the foodservice industry as a whole, with operators continuing to look for energy-efficient equipment and new technology that will provide a high-quality product without compromising speed of service.

"Everything always starts with the menu, and you circle equipment around that," says John Gimesh, partner at Client Liaison Customer, a Nashville-based consulting firm. "Energy usage and the knowledge of it is the next new hat operators need to wear."

Ventless equipment and combi ovens are more prevalent in B&I installations, due to the limitations of these spaces. "Many places where we bring in our services don't have ventilation or gas, so we're utilizing ventless deep fryers, ventless griddles and combi ovens," Benson says. "Frequently, foodservice is an afterthought, so we have to be smarter in our menu engineering to provide a high-quality product."

Exhibition cooking also continues to grow in this segment, as customers seek made-to-order dishes and versatility in terms of ingredients. Healthful eating, including a focus on vegan and gluten-free dishes, continues to gain momentum, too. "We used to have one to two menu items that were vegan and gluten free, but now each food station offers these items," Benson says. "Even folks without allergies are modifying their diets."

As the country's employment situation improves, B&I foodservice is expected to follow suit.

Key Equipment

  • Charbroiler
  • Rotisserie
  • Combi oven
  • Pizza oven
  • Fryer
  • Wok
  • Walk-ins

E&S Considerations:

  • Flexibility: To better compete with area restaurants, B&I foodservice operations need to offer a variety of dishes and have rotating menus. Equipment that is flexible for different tasks helps accommodate this need.
  • Size: In this segment, space is at a premium. Footprint is one of the main considerations, and smaller-sized units are generally most suitable for these operations.
  • Utilities: Gas hookups and ventilation are not always available in B&I foodservice facilities. In these cases, ventless, electric-powered equipment is necessary.


Case Study: Microsoft Corp., Redmond, Wash.Mark Freeman, Senior Manager of Global Employee Services

Q&A: Damian Monticello, Corporate Foodservice Liaison, Blue Cross and Blue Shield of Florida