Whether you are currently partnering with a dining services provider or considering a partnership with one, there are several types of contracts to consider. The contract your institution chooses can have a significant impact on the success of your partnership.
Here is a breakdown of the two most common contract types in the industry.
Fixed Pricing Contract
This option provides more predictable financial results for your institution. Key elements include:
- Fixed pricing to institutions based on meal plan types offered—institutions retain control over pricing to students
- Providers are tasked with managing program costs (food, labor) and assume ordinary risks related to price increases in these items
- Providers develop dining programs, including menus, concepts and innovations to maximize program performance
- Financial arrangement provides institution with commissions based on a percentage of revenue, with the goal of aligning partnership activities to maximize this revenue
Variable Pricing Contract
This option provides your institution with more ongoing visibility into program costs and decisions. Key elements include:
- Variable pricing to institutions based on the costs of the program; a fee usually goes to the provider
- Providers manage program costs (food, labor, directs) with institution retaining benefit (risk) related to fluctuations in these costs
- Flexibility, however, institutions bear more financial risk related to fluctuations in program performance
Although these two contract types are the most common, many institutions use a hybrid solution, such as fixed pricing for the primary meal plan element and variable pricing for more customized elements like catering, concessions, athletic dining and facilities services.
Interested to see which contract best suits your institution’s dining needs? Find out in this quick quiz!
How Can Aramark Help?
Aramark has the expertise and experience to help your institution develop customized meal plan programs and pricing to improve the financial performance of your dining program.
Aramark also provides broader services to assist higher ed institutions by:
- Transforming campus facilities through innovation and expertise, including custodial services, operations and maintenance, grounds and landscaping, energy management strategies, building commissioning, capital project management, and other strategic planning initiatives
- Engaging your students and staff with vending and beverage services to promote productivity and help them recharge throughout the day
- Providing rental, lease and purchase uniform programs and workplace supplies
Now that you know which type of contract will most benefit your school, your staff and your students, contact Aramark to determine your next step toward value-added dining services. Click here to get started.
Topics: dining services
