Managed-services Companies

Abstract

The on-site food-service industry continues to consolidate. Sales reached more than $80 billion in 1998, and may reach $81 billion in 1999. Growth in each of the on-site segments-which include food outlets in business and industry; schools, universities, and colleges; hospitals, skilled-nursing centers, and elder-care centers; correctional facilities; recreational facilities; and child-care centers-averaged 1 percent in 1998. On-site food service is still dominated by just three managed-services companies, ARAMARK, Compass Group, and Sodexho Alliance, which continue to differentiate themselves in terms of organizational structure, growth strategies, and market focus. To boost sales, the leaders employ such practices as multibranding, elaborate merchandising and marketing, and detailed market research. They are also integrating advanced inventory-management systems, management development, and creative labor-use practices, producing impressive cost reductions. Business-and-industry operations today are more akin to theme restaurants than cafeterias and, in another break from past practices, many eateries now offer service for multiple day parts. The menus vary often and not according to a cycle. The results include higher average checks and increased customer-capture rates.