Dining Service Weighs Options as Losses Mount

Posted on Feb. 9, 2007

More than four tons of food were kicked to the curb last year through UNC’s dining services operation, deepening a six-year profit deficit of about $1 million.

“The last two years we have lost money, but it can be associated with the Rams Head,” said Mike Freeman, director of auxiliary services. “It’s a beautiful dining facility, but it’s a very difficult venue to operate.”

In conjunction, the End Zone Sports Cafe will close at the end of the spring semester due to profit loss and poor student response. The End Zone is apart from the main dining hall and designed as a burger-and-sandwich sports bar (but without alcoholic beverages).

Throughout this summer, the top floor of this area will be available for rental for parties and other University functions, Freeman said.

The losses at the End Zone have been in the thousands of dollars every year, Freeman said, and its nemesis is a next-door neighbor: the Rams Head Dining Hall. For the nearly $7 it costs a student to get a cheeseburger, fries and soda at the End Zone, an unlimited buffet of more or less equal food lies in close proximity in the dining hall wing.

Coupled with this is dining services’ unique, and sometimes sticky, contract with Aramark, the food supplier that oversees UNC dining.

Aramark receives a 2-percent management fee of gross sales. This cost of operation is included in dining services’ monthly expenses, along with an approximately $500,000 annual use fee – for the cost of operations – that Aramark pays the University.

“We fronted them $600,000 to help with purchases, and at the end of each month they submit their expenditures to us and we reimburse them,” Freeman said. “So the University is responsible for any loss or profit.”

If the University does not receive the full $500,000 at the end of the year, then Aramark has to start paying dining services back from the management fee. In other words, Aramark can never lose money at UNC because dining services pays the company all allowable expenses – the worst they have to do is pay back the management expense, Freeman said.

The Rams Head facility, which Freeman considers to be “a learning experience,” is undergoing a menu of changes to combat the financial struggles.

Now, meal plans can be purchased only for a year instead of a semester, and the cost to the student of backing out is $250. In past years, many students would opt out of the meal plan program in the spring.

If dining services is to break even, 5,000 meal plans must be sold and kept for the year, Freeman said. In the fall, 5,442 meal plans were purchased.

But to further lessen the financial blow, several management positions were cut, and the price per meal increased.

Currently assessing the pitfalls of the End Zone Sports Cafe in the Rams Head Dining Hall facility, Freeman and his team are weighing the pluses and minuses of bringing in branded food, such as Bojangles or Taco Bell.

“You have to increase traffic 20 to 25 percent to make a profit,” he said. That is why dining officials are looking to convert the End Zone space into something that’s more laid-back. Freeman said he would like the venue to be similar to Alpine Bagel in the Student Union by offering later hours and more lounge space.

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Related coverage is available online:

• A Bite of the Rams Head: Chow down upscale on South Campus, then go work it off in style.
  Feature coverage from the May/June 2005 Carolina Alumni Review, available online to Carolina Alumni members.

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