Growth | November 2013 | By Sam Oches

A Lesson in College Foodservice

Millennial and Gen Z customers are the Holy Grail for quick-serve brands, and college campuses are ground zero for securing their life-long loyalty.

Quick service brands like Tropical Smoothie Cafe move to college real estate.
Tropical Smoothie Cafe aims to secure brand affinity among college students at its six campus locations. Tropical Smoothie Café
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Millennials. Ever heard of ’em?

Of course you have. Millennials are all anyone in foodservice can talk about right now, the crème de la crème of today’s coveted customer demographics. Depending on whom you ask, they might be 20 years old or they might be 35 years old; studies vary on what, exactly, the age range for Millennials should be. But there’s no doubt that whatever their age and whatever you call them, the young, pre-family customers of today are driving food trends and throwing quick-service brands into a tizzy of new product development and promotional innovation.

Some fast-food operators are happy to let their products and marketing do the talking, to wait and let the Millennials and the proceeding Generation Z demographic come to them. But others are being more proactive by opening up shop smack-dab in the hornets’ nest, in the hotbed of youthful activity and purchasing power: college campuses.

For these companies, operating at a college or university presents an opportunity to position the brand on the permanent dine-out radar of a customer who is learning how to manage his or her own discretionary income for the first time.

“The strategy behind us wanting to be in universities is we’re always looking to be in venues that build awareness of our brand, especially in markets where we’re not yet,” says Paul Damico, president of Moe’s Southwest Grill, which has 17 operating college-campus locations. “There are, in some cases, thousands or tens of

thousands of people who are being exposed to the Moe’s brand that may be seeing it for the first time. So we’re getting them as loyal followers when they’re 18, 19, and 20. Then, as they go back home, we’re starting to develop those markets.”

Charles Watson, vice president of franchise development for Tropical Smoothie Café, which has six college locations, puts it a little more personally: “I know with my college experience, there were a couple food and beverage places that are near and dear to my heart because of my experience in college. It’s a great time in your life. The ability to get a lot of brand affinity by being on the campus and being in that special part of someone’s life [is a smart move].”

Running a college-based restaurant is not as simple as finding open real estate on campus and operating like a traditional, street-side location, brand representatives say. From the beginning, quick-serve companies have a host of challenges when it comes to expanding in tandem with an institution of higher education. For example, operators generally have three business-partner options when it comes to such growth: They can franchise directly with a school, partner with a third-party foodservice contractor like Aramark or Sodexo, or work with an existing franchisee who owns the rights to a school’s market or territory.

Once the partnership is in place, Damico says, the brand is faced with several hurdles unique to operating on a college campus. For example, constructing the space could be limited due to size or building restrictions, retrofitting for equipment, and time constraints.

“One of the challenges with higher education specifically is the building of the restaurant is extremely expedited, because nothing can be built during the school year,” he says. “So it has to be opened and fully operational by the first day of school. That leaves you about a 70-day window where you’ve got to get it designed, get it demolished, get it built, and get it trained and ready for that student population. And it’s not like you can have a soft opening; there could be 20,000 students flooding the student union on the first day of school.”

Once the restaurant is up and running, brand representatives say, ongoing challenges include training and retraining a staff made up of students; adjusting to early-morning and late-night dayparts, as well as a schedule in which the school shuts down for holidays and summers; integrating efficient marketing campaigns into the fast-paced livelihood of the students; and matching holding capabilities with the necessary volume in campus locations.

But today’s university environment is also an increasingly difficult puzzle in which schools are trying to design a foodservice program perfectly tailored to the needs of the students. Whereas the previous college foodservice landscape may have been no more difficult than a food court in the student union, schools today are strategically locating certain brands in certain places and meeting the needs of the students through both national chain brands and in-house, proprietary brands.

Ann Marie Solomon, vice president of strategy development and national brand partnerships for Aramark, which runs foodservice operations for about 400 colleges and universities, says the company has a development tool that helps it figure out where students and activities are located on campus so the company can “start mapping out where appropriate dining solutions should be.”

“What are the total number of outlets that we need to have, where do those outlets need to be, what type of categories should those outlets represent so that we ensure we have a good mix—and when I say categories, I mean industry categories like burgers, chicken, pizza, those types of things—and in those categories, what is the brand that those consumers are going to respond best to?” Solomon says. “Then, which brands as a brand set work best together?”

Aramark has partnerships with several top quick-service brands, as well as with emerging brands. It also has a suite of proprietary brands that it employs to fill specific needs for its university partners.

More college campuses seem to be trending toward proprietary brands, whether through a contractor like Aramark or through the school’s dining services department. Michael Wuest, marketing manager of campus dining services for the University of Missouri, says surveys repeatedly came back to the school saying the student body was tired of traditional brands like McDonald’s, Wendy’s, and Taco Bell. While many of those brands had a presence on Mizzou’s campus in the past, of the 21 restaurants on campus today, only three, he says, are nationally branded: one is Starbucks, two are Subway.

He says the decision to move toward proprietary brands was partly facilitated so the university could more carefully control menus and costs, but also because students were expressing a desire for more variety in their dine-out options.

“People are like, ‘Well, I can just walk right off campus and go to Chipotle or I can go to Which Wich.’ There was a big disconnect in that they would go off campus because they can get better-quality food,” Wuest says. “And we really had to step up our game. I think that was one of the biggest things is, it’s easy just to bring in a national brand and follow their guidelines and standards, but it’s a lot harder when you have to develop it yourself and then maintain your own standards and meet the needs of your students.”

Wuest and his team have developed, among other services, a coffee shop brand, a salad-and-wrap joint, a pizza-and-pasta station, a restaurant featuring barbecues of the world, and a classic American grill called Mort’s, which was named after Beetle Bailey creator and Mizzou alum Mort Walker. Mort’s won the gold award for retail sales in a large single concept, as well as the grand prize among all university nominees, at the NACUFS Loyal E. Horton Dining Awards.

Wuest says Mizzou chose to keep Starbucks and Subway on campus because the restaurants were very successful and because the school had a strong partnership with each brand. The Starbucks location, he says, is a hands-off, low-maintenance operation for the school, while the Subway units help drive traffic to Mizzou’s convenience stores, one of which pulls in outsider traffic from the local hospital.

Janet Bencivenga, Subway’s global account manager who oversees college and airport development, says Subway has 515 college locations worldwide, adding that the brand is a natural fit for the higher education environment.

“Our goals and visions, in a lot of ways, already match up,” she says of college campuses. “For instance, one thing that comes to mind is, on a campus, social responsibility is a large component of what is on the students’ minds, the faculty’s minds, and the administration’s minds. We have many initiatives that have to do with social responsibility. That is one way we can be a rather attractive brand to bring onto the campus.”

“Goals and visions,” as Bencivenga says, are an important component to the relationship between a college and a quick-serve brand. Both sides want to ensure the partner will be financially beneficial, but also that the values of each institution don’t threaten to spoil either side’s participation.

Wuest says that relationship weighs heavily in the decision-making process at the University of Missouri.

“That’s one of those conversations that usually comes up in the beginning,” he says. “Their service model: Does that meet what our mission is? What are the values of the university, what are the values of our department, and are they aligned? Maybe it’s one of those concepts that’s pretty edgy but pretty popular, but maybe that type of edginess doesn’t really fit with what we believe, so that won’t be considered.”

Along with the broader values shared with the partner restaurants, national trends are very much determining the decisions that colleges are making for their foodservice programs.

“One thing that will always drive Millennials, and that hasn’t changed, is convenience,” Aramark’s Solomon says. “They want what they want when they want, where they want it. They are huge impulse buyers, so if you have something in the right place that’s a product that is appealing to them, they will purchase it. They are shifting toward more fast casual and the customization that comes along with that, and that’s a good service model. However, they’re not always willing to wait for that, especially in the college/university environment.”

The movement toward fast casual and customization isn’t the only trend affecting the overall restaurant industry that are trickling into the college environment. Just ask Kennesaw State University. The Georgia school has found great success in developing foodservice solutions in line with other trends popular with the Millennial and Gen Z demographics. For example, the school has an on-campus farmer’s market; brines its own pastrami, corned beef, and pickles; grinds its own grits, flour, and polenta; has in-house hydroponic units that supply 700 heads of fresh lettuce every three weeks; and locally sources everything from milk and vegetables to chicken, pork, and seafood. Kennesaw State’s The Commons culinary center is even LEED-Gold certified for its construction, waste reduction, energy conservation, and recycling practices.

The university’s culinary and hospitality services department has invested so much in next-generation campus foodservice options that the program this year won the National Restaurant Association’s Operator Innovations Award for sustainability, as well as its prestigious Innovator of the Year award.

Gary Coltek, director of Kennesaw State’s culinary and hospitality services, says The Commons is “more like a nine-station restaurant than it is a college campus,” with cooks that have their own mise en place and sinks, and food that is cooked to order. More importantly, he says, the school produces foodservice solutions that its students crave.

“We know our students well,” he says. “We interact with them every single day, we take their comments seriously, and we’re constantly evolving as it relates to retail and our dining halls.”

Coltek says he has seen Kennesaw State’s student demand shift toward more fresh, healthful offerings. When The Commons first launched four years ago, he says, the most popular station served hamburgers, hot dogs, and cheesesteaks. By the time the students who were then freshmen graduated this year, that station was the least popular. “They’re gravitating toward healthy proteins, lean proteins, salad bars, and composed salads,” he says.

Kennesaw State does partner with several national brands, including Chick-fil-A, Freshens, PJ’s Coffee Café, and Einstein Bros. Bagels. But Coltek says he’s carefully selecting brands that both make financial sense for the university and also fit into its push for a more socially conscious program.

“I’m looking for these small brands. They don’t even have to be local; they can be regional or national,” Coltek says. “You’re going to see a lot more brands coming out that operators like myself are going to gravitate to simply because of cost and menu.”

National quick-serve brands that have deemed college campuses an important part of future unit development are indeed adapting their business models to accommodate the shifts in college students’ demands. That’s especially true for companies like Bubba Burger, Zaya Mediterranean, and Freshens, which offer their products and services to colleges through license agreements instead of traditional franchise agreements, meaning schools do not need to pay marketing or franchise fees.

Steve Kibler, vice president of business development at Freshens, says his company readily adapts its model for colleges so it can position itself in front of the younger demographics. Roughly one-third of Freshens’ 850 units, he says, are on college campuses.

“There is a triangle there,” he says of operating on college campuses. “You’ve got the institution, you might have this contract manager with the dining-services department, and then you’ve got the brand. And you’ve got to manage that triangle of relationships. It’s really important because every stakeholder has got something that they want, and you need to accommodate both, but you can’t accommodate them 100 percent.”

Freshens’ smoothie, crepe, salad, and yogurt offerings are directly in line with the fresh, healthy fare college students are seeking today. But Kibler also believes the brand makes a solid partner for colleges and universities because it tweaks its standards and is flexible in its operations—even in its menu—to match whatever environment it is entering.

“For Freshens, we recognized that we had to adapt the footprint, because you’re going to find yourself in libraries, student unions, business schools, rec centers—there’s a wide variety of locations that you’re going to end up in, and that’s going to affect your ability to communicate and access traffic,” Kibler says.

The good news for quick-serve operators, Wuest says, is that the shifting demands from Millennials and other young demographics should guarantee that national brands have a place in the college foodservice conversation for years to come—so long as they keep up with the changing trends.

“Probably a lot of universities across the country are going to start going to a lot more of the quick-service, fast-casual restaurants,” he says. “You’re not going to see the all-you-can-eat facilities as much anymore, because there are just so many benefits to having the [quick-serve] model.”