Aramark Holds High Presence in Food Service Industry

By:  Nicole Esplin

What do Elon students, Olympic athletes, prison inmates and nursing home patients have in common?  Aramark.

People may recognize Aramark as the name written in bold red letters on white trucks they pass on the interstate or the name next to each deposit of meal plan dollars on Blackboard, but the service company stretches much further than Colonnades Dining Hall.

Whether it was a hotdog and fries at Wrigley Field or a pre-Olympic dinner consumed by an elite athlete at the Beijing Olympics, Aramark has provided the meal.

Aramark is a private service corporation based in Philadelphia that provides food services to nearly every industry.   Market Research firm IBIS World reported that Aramark “has the catering rights to 84 professional and college teams, including 42 teams in the MLB, NBA, NFL and NHL.”

Additionally, Kalorama Information reported in their Foodservice Industry Report that Aramark provides service to more than 95,000 inmates in over 150 institutions in the United States.  In the Educational Sector, Aramark serves over 1 million students in 330 school districts, and in all their venues combined, they serve 1 billion cups of coffee, 400 million servings of soda and 200 million snacks a year.

Having expanded from its west coast roots which began in Southern California in 1936 in the trunk of founder Davre Davidson’s Dodge Coupe, Aramark is now recognized as one of Fortune Magazine’s 50 most admired companies of 2012 and one of Business Week’s best places to launch a job.  Aramark currently employs 250,000 workers from locations in 22 countries worldwide, and the average starting salary was between $40,000 and $44,999 in 2009.

Aramark competes in the food service industry with Compass Group, Sodexo and Delaware North Companies.  It currently holds 29.2% of the market share for the industry, according to IBIS World’s Food Service Contractors in the US March 2012 report.

Initiatives in Healthcare and Education Venues

How has Aramark transformed from a small service industry into a multinational company that serves more than 2 billion meals per year?

IBIS reported that the company’s revenue grew 4.1% in fiscal 2011 due to a focused effort to expand Educational and Healthcare venues, which offset a decline in its Sports and Entertainment sector.

“The company was particularly affected by reduced attendance at sporting functions, a fall in travel and tourism to national parks and lower attendance at convention center functions and meetings,” IBIS reported.

Datamonitor’s SWOT analysis of Aramark from April 8, 2011 reported that Aramark’s greatest opportunities for success were in the healthcare industry.  “The demographic trend towards an ageing population in the US which in turn boosts the demand for senior living, presents a strong growth opportunity for the company’s healthcare division,” Datamonitor reported.

To create a lasting impact in the healthcare sector, Aramark has corporate groups who work to market Aramark’s services to hospitals.

Bids for proposal usually come from self-operated venues or venues that have used specific contractors for a while and put out a bid to see what other service providers offer.

Aramark Administrative Coordinator for Duke University Hospital Erin Holdin discussed the process that the company uses to gain more clients.  “We always have feelers out there looking to see who has an open bid for proposal,” Holdin said.

Social Media Marketing Campaigns

Aside from the directional changes at corporate to increase their market share in the healthcare segment, marketing directors have evolved with the changing culture of the social media-driven marketplace by strategically placing campaigns in dining halls and joining forces with ethical campaign groups to present a flawless image to consumers.

“Social media is something that is growing, and we are evolving to meet that demand,” Holdin said.  “We have developed a managerial responsibility to monitor the various social networks and see what people are saying about our company.  We are trying to identify all the places that our services are being discussed and we provide feedback where it is appropriate.  We used to only worry about feedback from print articles, but now it is everywhere and all the time.  ”

At universities where Facebook and Twitter rule the electronic grid, marketing success for a company is directly related to the number of ‘likes’ a page receives by followers.

Aramark works to keep Facebook, Yelp and other social media sites free of negative comments regarding Aramark, Holdin said.

Aramark uses social media to update students with news daily about meal plan changes and different events happening with campus dining.

“Students are the ultimate multitaskers who expect to be able to access a variety of information in many formats 24 hours a day. Social media outlets and texting have become key communication vehicles for this demographic, so it is vital that dining services communicate via these channels,” Katie Nelson, Aramark Marketing Manager at Elon University, said.  “We have what we call a VIP Text Club where students can opt in to receive texts and special offers from dining services. We also maintain a Facebook page where we relay dining information, event news, changes, special coupons/deals and more.”

Nelson also works with the Elon University Student Government Association to promote student involvement in choosing meal options.

Jana Lynn Patterson, Assistant Vice President for Student Life at Elon University, works closely with Aramark.

“SGA supports the initiatives conducted by Aramark,” Patterson said.  “Usually, Aramark will come to an SGA meeting and report their general findings and any changes they are making based on those findings to the senate.”

“We meet regularly with the SGA Food Committee, conduct online surveys each semester, perform surveys and encourage students to provide their feedback and suggestions at any time,” said Nelson.

All the positive changes made by focused marketing campaigns have helped Aramark, but PR initiatives to highlight the company’s community service objectives have given it an edge against market competition.

The company was plagued by scandals in the 1970’s, when various publications accused Aramark (then named ARA) of involvement with corrupt owners, ties to the mob and low food quality.  The Massachusetts Institute of Technology’s alternative news publication The Thistle reported, “In 1977, ARA admitted to making questionable and sometimes illegal payments between 1970 and 1976, according to a Securities and Exchange Commission (SEC) report.”

Though there is certainly still a large percent of businesses and individuals who criticize Aramark, the food service corporation has managed to turn its image around on a national level.  Aramark’s rating on the Better Business Bureau website is an impressive B+ (much better than Compass Corporation, which posed a D), which is largely due to their strong public relations department.

If Aramark’s marketing initiatives revolve around social media, its public relations department is focused on strategy to promote it in an exclusively positive way.

In schools, Aramark has implemented the 10% campaign, where they promise to incorporate at least 10% local foods into their meals.  With the recent all-natural, all-local trend in the United States, Aramark caters to requests of consumers by highlighting which of their foods are produced locally with green logos.

“We purchase fresh, quality foods from local, regional and national suppliers who meet our high quality standards. We conduct a rigorous evaluation process before partnering with a supplier to evaluate whether they meet our standards for food safety and quality,” said Nelson.  “All the pastries and muffins in Acorn Coffee Shop are locally sourced and have the ‘local’ logo on their price tag. Each dining location offers a variety of local options.”

Aramark also teamed up with Elon University to create Elon’s Campus Kitchen campaign, which works to reduce food waste by donating left over dining hall food to the Allied Church’s soup kitchen in Burlington.  Aramark funded the project by donating $50,000 to the campaign, and provides resources including food, storage space, general expertise and equipment.

There is room for improvement for Aramark though.  According to OneSource’s Global Business Browser profile on Aramark, the company relies heavily on food and related products from SYSCO Corporation.  In 2010, almost 57% of Aramark’s food and non-food products in the US and Canada were distributed by SYSCO Corporation, and in the case of an emergency event or operation disagreement, Aramark’s food service to its venues would be compromised.

According to Datamonitor, Aramark’s biggest threat is the intense competition it faces against Compass Group and Sodexo.  “Intense competition may diminish the demand for the company’s products and subsequently the market share, which adversely affects the financial performance of the company,” reported Datamonitor.

Aramark’s projected revenue for the year ended September 2012 is $9.5 billion, an increase of over $500 million from 2011.  Through focused social media campaigns and increased presence in the healthcare sector, the company has laid the foundations for continued growth.

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