Features

Behind the balance sheet: an inside look at BDS

By
Staff Writer
Thursday, October 14, 2010

Meal plan costs are set each February based on recommendations of the University Resources Committee. This year, they increased 2.5 percent.

While all undergraduates depend on it at some point during their time here, Brown Dining Services is little understood by the student body. BDS is always a topic of conversation — students can be overheard raving about a new muffin flavor at the Blue Room, comparing menus at the Sharpe Refectory and the Verney-Wooley Dining Hall or complaining about how much certain items cost in BDS’s eateries. But students are less sure about how BDS does business.

Many students interviewed at the V-Dub said they were unsure about how BDS’s business operates. “I don’t know how they make money,” Adelle Molina ’12 said. Julia Carr ’14 said she would guess BDS breaks even. Tia Su ’14 said BDS is “probably making profits.” Orlen Shiba ’13 said he would guess BDS is “going on a loss.”

The lack of agreement on BDS’s profitability attests to the mystery of how its practices lead to the cost of meal plans, the values of meal credits, the menus and the cost of various items.

 

Meal plan madness

The number of students signed up for meal plans has been steady for about the last five years, said Gretchen Willis, director of Dining Services. In the late 1990s, there were only about 3,600 students on meal plan, which was lower than BDS wanted, she said, so they began a department initiative to raise the number to 3,800 students. Now the number of students on a meal plan is about 4,650, she said.

BDS has made many changes to the program in recent years, including extending dining hall hours — the Ratty and V-Dub used to close for the day at 5:45 p.m. — continuous service at the Ratty, and a take-out program. These changes came from looking for ways to meet student needs while also maintaining a residential dining system, Willis said.

BDS researches student opinion in a number of ways. It conducts small surveys, liaises with the Undergraduate Council of Students, collects comment cards, hears critiques from customers and sometimes receives e-mails, Willis and BDS Director of Administration Ann Hoffman told The Herald in a joint interview. Keeping track of what students choose from the daily offerings gives BDS a form of nonverbal feedback,  Willis said.

 

Credit crunch

The value of a meal credit is determined by the price of the 20-meal-per-week meal plan. This year, the value increased from $6.00 to $6.15, which represents a 2.5 percent change.

Often, students do not understand the value a credit has in retail eateries, Willis said. Using a meal credit at a retail eatery does not necessarily mean getting a full meal, she said.

Molina said she finds it a struggle to make her purchases at the Gate equal $6.15, saying that if a student buys a panini, there is nothing else at the Gate the person can add without going over the value of a credit.

The concept of making meal credits equivalent to a dollar value in retail eateries started in the early 1980s, Willis said. The idea was that students were supposed to have three meals a day, but due to classes or other constraints on time, they might only have time for two, she said. The third credit could then be used as a late-night snack.

Students often complain that the Blue Room does not take meal credits during the day. Willis said this policy is necessary because the space is too small to accommodate the crowds that would probably go there for lunch if meal credits were an option. Faculty and staff opinion was also a consideration because their access would be severely diminished if students could spend meal credits during the day, she added.

 

Business acumen

BDS operates on a “break-even budget,” Willis said. Revenue comes from two sources, meal plans and catering, with the greatest percentage of revenue coming from meal plans, she said.

But it is the University Resources Committee, not Dining Services, that sets the cost of meal plans, Willis said. At its February meeting, the Corporation, Brown’s highest governing body, sets the budget for the year ahead and the prices for all fees, including meal plan, based on the committee’s recommendations.

The difference in the costs of meal plans is based on the number of meal credits and points each provides, Willis said. Everyone must pay for labor and overhead, meaning there is a certain minimum buy-in to be on a meal plan.

The cost of food from each meal plan is based on estimates of how much students eat, rather than how much they can eat, Willis said. BDS tracks how many meal credits students use out of how many they are allotted, and there are usually unused credits, particularly on weekly meal plans, she said. This is the “missed meal factor.”

Therefore, students on the 20-meal-a-week plan are not actually paying for 20 meals — they are paying for the average amount of meals people with that plan eat, she said. By contrast, students on Flex meal plans tend to use almost all of their points and credits by the end of the academic year, she added.

 

Vulnerability to the market

Enterprises like BDS can be hit hard by national trends in food and gas prices.

Two years ago, rising food prices forced BDS to find a way to manage the increased supply cost, Willis said. Eliminating certain menu items was one way BDS compensated for higher food costs, she added.

BDS operates with a computerized menu system, Willis said. The software facilitates substituting one dish for another, she said, so BDS could temporarily phase out recipes that require more expensive ingredients.

The software also helps BDS know which dishes are most popular with students, and if students do not take much of a dish, it may be eliminated to make room for a more popular item, Willis said. But the tabulation is also affected by the food that students take but do not eat, so waste could skew the results, she said.

High gas prices hurt BDS, too. Many of Brown’s food suppliers tried to add fuel charges to their delivery fees to compensate for their higher gas costs, Willis said, but BDS was generally able to use its buying power to get around those charges. Such charges also encouraged BDS to use as many local products as possible, which need less gas to transport, she added.

 

Responsibility costs

BDS is mostly protected from unexpected spikes in its labor costs thanks to its union system, but it comes at a cost.

Willis said BDS is a closed union shop, meaning that everyone who works for it must belong to the same union — in this case, the Service Employees International Union Local 615. The union negotiates a new contract with Brown every three years, she said. This gives BDS stable labor costs for three-year spans and allows it to budget for future increases.

The fact that all hourly staff are part of a union has led to higher wages and better benefits than others might provide. BDS is “committed to paying certain wages and benefits,” Hoffman said. That “comes at a cost, which we have to pass on to our customers.”

BDS also operates with the help of a student management program, in which it hires students to manage student workers, Willis said. The students work alongside the unionized hourly workers. It becomes a familial relationship, Hoffman said. Workers “form close bonds when (they’re) chopping carrots next to each other.”

BDS also employs some students from Johnson and Wales, particularly in its catering program, Willis said.

 

Accounting for the environment

Various environmental initiatives have impacted BDS’s budget.

The elimination of bottled water from retail eateries would have had a huge financial impact on BDS if it had been done all at once, Willis said. Bottled water has a large profit margin, but it was phased out slowly over three years, and now students spend their points on other things, she said, adding that BDS has
heard little negative feedback on the issue.

The move toward eliminating trays from dining halls has had less of an impact financially. Trays were completely eliminated from the V-Dub two years ago, while a pilot program began this semester at the Ratty. Other schools that eliminated trays saved money on food because students wasted less, but Brown did not follow that trend, Willis said. Transitioning to a completely trayless system will be harder at the Ratty than it was at the V-Dub, because the trays are the method of transporting dirty dishes to the lower level where they will be washed, she said, though the pilot program has gotten good feedback.

Students “just jump on board with anything,” Willis said.

 

Profits and losses

Despite the goal of breaking even each year, some years see losses for BDS, while others see profits.

There have been losses in previous years, but not in the past four to five, Willis said. Those cases can be predicted before the end of the year, she said. Because most of BDS’s revenue comes from meal plan subscriptions, BDS can predict if it will fall short if fewer students than expected signed up for a meal plan, she said.

BDS does not usually make a profit once all the fees have been paid, but it has happened. Typically it is a result of saved labor costs, Willis said.

“If there’s anything left over, we put that back into the program,” Willis said, citing an example from last fall when a small budget surplus allowed the Ratty’s back alcove to be upgraded with a plasma television and couches. In the future, BDS will be looking to replace the furniture in the Gate, she said.

 

Peer programs

Many universities run their own dining programs, but many also outsource them to companies.

Of private colleges and universities in Rhode Island, Providence College’s and Bryant University’s programs are outsourced, and the Rhode Island School of Design’s used to be, Willis said.

In the Ivy League, Willis said the University of Pennsylvania is the only school that has brought in an outside company to handle dining.

Penn began to outsource its dining operations in 1999, after a decision based on “the goal of enhancing the student experience in quality, variety and preparation of the food relative to the costs of those enhancements,” wrote Barbara Lea-Kruger, director of communications and external relations in Penn’s Business Services Division, in an e-mail to The Herald.

According to Penn’s dining services website, students on meal plan can use their Dining Dollars — Penn’s version of Flex Points — to buy items from eateries such as Chick-fil-A, Subway, Au Bon Pain and Starbucks.

Outside companies look to make a profit from their operations on campus, Willis said, and the decision to outsource dining is related to the culture on campus.

 

Competing with Stop and Shop

Items in the Gate “feel overpriced,” Shiba said. He said he sometimes buys things there with his Flex Points because they don’t “feel like real money,” but that he can get many of the items cheaper elsewhere.

Jeff Martin ‘10.5 said he thinks students perceive BDS eateries to be overpriced. He said he would point to the amount of food stolen by students from dining facilities as an attempt to get their money’s worth. While students may spend “a bit more” at a retail eatery like the Blue Room, he said, they are more able to get the items they want than they would at a dining hall.

Some students compare BDS with major retailers like Stop and Shop, Willis said. But the comparison is unfair, she added, because BDS is providing a completely different product. It does not have the buying power that a national grocery chain has and also has to account for large labor costs, she said, so prices will be higher.

If BDS can find a cheaper way to provide a product, it would pass those savings on to the customer, Willis said. On some high-volume items, BDS can afford to decrease its margin, she said, adding that if an item is not selling at the price BDS needs to charge to achieve its margin, it might be eliminated from the offerings.