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Will the rise in university fees affect college catering?

19 April 2011

The quality of college catering is coming under increased scrutiny from a new generation of students with more sophisticated tastes, but can caterers turn this to their advantage?Gemma Rowbothamreports

University students in Britain may have a reputation for slovenliness, but with their fees rising to as much as £9,000 per year, those providing student services will need to be anything but slipshod.

The much-debated rise in fees has had the effect of bringing two opposing forces to bear on contractors. As students' fees rise, so too do their expectations, but because they have less money to spend they will also be looking for better value. Operators cannot simply put their prices up to cover the cost of providing a better service; they will need to try to balance the two.

Nigel Monks, assistant director of group catering services at Reading University, says one of the reasons catering companies might struggle is that there is no direct correlation between the increase in fees and the catering service. "The impact of the fee increase will be to fund educational activities. But because fees will be going up, students will take a far more concerned view about the environment they're going to," he explains.

Students today are accustomed to greater choice and better deals on the high street than they were 10 years ago and will spend more time considering the pros and cons of each university, with the campus setting having a greater influence on their decision. The financial pressure they face means that, now more than ever, value is a priority. They expect the same if not better than the high-street offers, and if they don't get it, they will vote with their feet.

Standards have also gone up. Furthermore, buying healthy options is increasingly important, as is the ethical and fair-trading status of foods. Research undertaken by Caterer in association with Oreo found that even with on-the-go snacking there is a desire for healthy products. Some 79% of respondents said their on-the-go consumption was increasing, while 82% said that this involved healthier snack options. In a university setting this presents an opportunity for those operators capable of upping their offer to embrace student tastes.

According to Peter Taylor, head of universities at Sodexo, there are more than 100 universities in the UK excluding Oxbridge, but less than 15% of the market is contracted out. This leaves plenty of room for a contract caterer seeking to specialise in the sector, according to Tony Byrne from Chartwells, the education division of Compass Group. "As the sector experiences an even tighter squeeze on budgets, universities are much more open to bringing in specialist service providers to reduce costs and increase efficiencies," he says.

However, caterers will have to build trusting relationships with businesses not used to out-sourcing in order to build the right offer, according to Aramark sales director Tony Heddon. "These relationships mitigate the fear and risk involved, and having an open dialogue during the tender process is vital to ensure all these areas can be discussed," he says. "A closed tender process makes it incredibly difficult to get under the skin of the challenges and ensure an effective solution is found."

But it's not just a question of duplicating what's on offer in primary or secondary education. School leavers now enter further education with more sophisticated tastes and eating habits than they had 10 years ago and their expectations are higher. Niccola Boyd-Stevenson, managing director at Panache Consultancy, thinks these are often not met. "There are a lot of universities out there that provide very poor catering," she says.

"Higher education has an expectation of high-street standards at a value-for-money price," adds Heddon. "Students will pay for quality food as, typically, the only thing we are compared to is the high street," he says. "They also have high expectations for ethical sourcing, particularly Fairtrade, and are keen to see strong environmental practices."

But there are additional obstacles to overcome for a budding higher-education caterer. First of all, it is generally expected that the catering partner will take most of the financial risk - a somewhat unfair exchange in some cases as there is no autonomy of business. The client will want to control the tariff, what can be sold and what times the location will be open, but will still want to give responsibility to the contractor.

There are a number of contract types in play, varying from an agreement of budgets to operations having to make a financial return for the university to reinvest into its facilities. Taylor explains: "We try to ensure there is a balance between financial risk and reward, and food and service quality. Most of our contracts are for fixed terms, which also include break clauses, commonly for five or seven years. However, with increasing expectations for investment we also operate some contracts within a 10-year term."

The way in which clients are looking for this own-risk commercial style of catering is presenting a problem for smaller companies that do not have the investment, procurement, backing or the case studies. The university market is very risk-adverse and it takes a lot to convince a client that they can do something different. A lot of clients want what the smaller companies can provide but they don't like the element of risk that comes with it.

Boyd-Stevenson believes that this isn't always in the caterer's interests. "Smaller companies are providing what the customers want and can be more flexible on the delivery of service, such as opening hours. However, these companies shouldn't be used as banks. It eliminates a lot of the smaller companies, because they can't find that level of investment. It's not a good way of funding the catering service, and this is why the likes of Compass and Sodexo still have the lion's share of the market."

So how can new firms capture a piece of the market? First, it is important to be creative and listen to what the students want. It is essential to understand the trends in the market and be ready to innovate when they change. One example is the rising popularity of "street food" outlets that serve chicken satay and kebabs cooked on an open griddle in front of the customer then put in a wrap and eaten on the move.

Carl Morris, marketing and corporate communications director at Elior, says: "The primary way to capture the market is by focusing on the customer experience, so when they come to the outlets they really are treated as important. When we get that right we get the repeat business."

Crown Group introduces feed pod for students

In recognition of the grab-and-go nature of much student dining, the Crown Group has opened its first Feed pod at Cambridge University.

The pod is located in the foyer of the Babbage lecture theatre at the New Museums site and caters for up to 4,500 students, university staff and visitors every day.

Serving hot and cold drinks, breakfast, sandwiches, salads, snacks and fruits, the pod is an extension of the group's café brand, which was launched at the Brighton Centre in 2010.

Charles Beer, Crown Group's chief executive, says the group is pleased to be operating in such a prestigious location. "The essence of Feed is very much about providing simple, quality sandwiches that are served by friendly and energetic staff," he says. "We enjoy our food and hope that our customers can enjoy it with us."

The caterer is setting the standard for the high street to follow, according to Nick White, operations manager at Cambridge University.

"We are really pleased to host the first Feed pod, which is proving popular with our staff and students," he adds. "The pod is a novel twist on the traditional grab-and-go concept and has set a new benchmark for other high-street retailers to match."

Ten ways to break in to the student market

â- Broker an investment partnership with the university so there's a cash return to the client - it will then be in both parties' interest to make the business work.

â- Introduce changing loyalty schemes and promotions in line with the seasons in order to keep the offer fresh.

â- Employ students on short-hour contracts to keep costs down and interact with the target market.

â- Identify and replicate high-street trends on campus, such as the growth of the coffee culture.

â- Operate flexible opening hours to meet the shifting needs of the student customer.

â- Ensure ongoing engagement with the customer and listen to feedback to make sure their needs are met.

â- Encourage repeat business through loyalty cards to ensure your customers will spend more.

â- Include your outlet as part of the new smartcards system, which allows students living on campus to take their meals at a location and time convenient to them.

â- Adopt the trend of operating smaller grab-and-go facilities as near to academic facilities as possible.

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