Alabama State University is being sued by its former food service vendor, Gourmet Services, for what company officials call a ‘breach of contract’ on terms outlining a potential contract extension. But in the weeks leading up to what eventually would be Gourmet’s ouster and the naming of food service conglomerate Aramark as its replacement, ASU officials offered a glimpse into what the school’s review committee was seeking in a new provider. From the Montgomery Advertiser:
A committee formed to choose between five vendors — including the university’s current vendor Georgia-based Gourmet Services — suggested the board approve a five-year contract for an unnamed vendor that isn’t the current one. The Gourmet Services contract expires May 31.
Despite the suggestion and the need for haste, the board moved to delay its selection until either May 19 or May 22 after some board members felt the committee’s selection warranted more scrutiny…
“Based on the financial analysis of the one we’re picking, we would leave money on the table,” trustee Brenda Hunter said.
That “money on the table” was eventually revealed to be a pledge from Gourmet to support facility renovations and student scholarships. From the Advertiser:
Also, as part of the contract, Gourmet Food Services had agreed to invest nearly $1.6 million into ASU’s new stadium project. The contract also provides that it would invest in scholarships, the president’s picnic, a fundraising gala and other areas.
The story of Gourmet v. Alabama State University is a familiar tale of how HBCUs struggle to maintain solid partnerships with food service vendors, regularly covered in media and bearing a stigma among students and alumni as a mire of bad food quality, unpaid bills and broken promises.
Behind these headlines is a financial reality unbeknownst to most HBCU stakeholders – that these companies are often unspoken financial lending institutions, pressured by HBCU executives to keep students in school, buildings renovated and accreditation in good standing.
Who is Feeding HBCU Students?
Depending upon enrollment, dining services at HBCUs carry an annual payout of between $5 and $15 million, often the largest contract offered at any given school. Most black college food service contracts are held by six companies – Aramark, Sodexo, Thompson Hospitality, Perkins Management Services, Gourmet Services, and ABL Management.
Most colleges find a food service vendor by a customary, request-for-proposal process that ranks vendors on their experience, success rate at peer institutions, cost and fit with a campus. But the awarding process is often dotted with conversation about how these vendors can support campus development with donations to scholarship funds, commitments to renovating dining facilities and other areas on campus, and offering in-kind support to campus events like homecoming galas and athletic events.
Aramark invested $5 million at the University of Kentucky for internships, faculty development and redesigned food service facilities – just one of dozens of examples of how it can incentivize receiving a contract from any institution, but particularly from HBCUs which have glaring needs in capital renovation.
Aramark and Sodexo have hundreds of clients and billions in revenue. But they have also paid out millions in discrimination lawsuits. Despite similar records in the treatment of African American employees, the two companies hold just under half of all publicly known HBCU food service contracts.
Law360, Washington (November 24, 2015, 5:52 PM EST) — Federal contractor Aramark has agreed to pay back wages to over 300 African-American and male employees the Department of Labor said were denied food service jobs on the basis of race… To view the full article, register now.
In 2001, the food services giant Sodexo was hit with a class action discrimination lawsuit by a group of African-American employees. The suit set off a period of self-examination and the development of strategies to make the company more inclusive.
Promises of cash and construction usually box out smaller food service vendors; frequently the black-owned companies with direct ties and interest to HBCUs. Of the six serving most meals on HBCU campuses nationwide, only Perkins and Gourment are 100 percent black-owned; Thompson operates under a partnership with the Compass Group, and ABL was purchased by TrustHouse Services in 2015.
While most schools do not divulge their food service contracts, an analysis of publicly listed food service relationships shows that Aramark and Sodexo are currently listed as providers at 31 four-year HBCUs, while Thompson’s and ABL hold 23 contracts. A majority of these are public and state flagship HBCUs.
Perkins and Gourmet collectively hold 10 HBCU food service accounts. With a low estimate of $5 million per contract, HBCUs provide a minimum of $270 million annually to non-black or black companies with partnership agreements, while 100 percent black-owned firms earn just $50 million from black colleges.
HBCU Economic Ecosystem in Jeopardy?
Food service companies do not violate most state business or ethics laws by serving as a go-between for campus service and construction projects. But it brings into a focus a question of how easily contracts can be purchased by big white corporations, even at the expense of food quality and building black wealth for students and companies.
If Aramark and Sodexo can front load contract agreements with improvements to campuses, does the cost come back to students in the form of increased meal plan prices? When food service quality suffers, how much do colleges lose in uneaten meals?
And when colleges become dependent upon companies to build facilities or to fund scholarships, how does it lead to multiple contract extensions, further limiting the ability for black companies to compete for black college vendor opportunities? And this isn’t to mention when schools cannot afford to pay monthly bills for food service,m and are held hostage by the debt in matters of accreditation review.
All of these questions have implications for student debt and student satisfaction with the on-campus experience – a reality which is already felt by most campuses across the nation, and by HBCU culture at large.
It sends a quiet message that our communities are willing to take a hypocritical view of HBCU value and support. Yes, it seems like good business acumen to select food service providers with proven records of investment and capacity building at larger institutions.
But this is the same perspective millions of black students use in opting to attend predominantly white colleges with bigger buildings, more academic programs and more scholarship dollars.
There is no question that without HBCUs higher education would have an outright crisis in opportunities for black professors, executives, coaches and mid-level managers. More than 10 percent of the nation’s African American students would have limited educational opportunities and even fewer opportunities to be nurtured in an academic setting.
This is the unspoken element of HBCU relevance – the way our schools serve as economic drivers for black people and communities. So how is it that the majority of our schools have not taken the next step in helping to create the billion dollar companies which can help to bolster institutional fortunes?
Or is the colder ice we accuse so many black students of seeking at PWIs just right for our own cafeterias when it comes to awarding multi-million dollar contracts to white-owned companies?