University of Kentucky plans to privatize its dining services

lblackford@herald-leader.comFebruary 4, 2014 

The University of Kentucky plans to privatize its dining services, with the larger goal of bringing in millions of dollars for new dining facilities on campus, UK President Eli Capilouto announced Tuesday.

UK will begin negotiations with vendors immediately, Capilouto said.

"We have a very good dining operation and exemplary staff," Capilouto said. "That has never been in question and it shouldn't be now. But the most important question is, how do we ensure that we have the best possible service for all those we serve going forward — most significantly our students?"

UK officials have reviewed and discussed food-service options for the past year. Two committees and several public meetings sparked plenty of debate from local food advocates, who worry that a large corporation won't heed a growing local-food movement.

Capilouto said UK's best interests will be served by a partner who can "invest millions of dollars in upgrading dining facilities across campus, offer more convenient hours and expand food options, including healthier choices for customers."

UK is in the midst of another public-private partnership with a developer, Memphis-based Education Realty Trust, which is building $348 million worth of new dorms. That is expected to bring 21 percent more students to campus by next fall. However, the agreement does not include dining facilities, which left UK in need of a new partner to put up the equity for those new spaces.

Capilouto will review and approve any final proposed agreement. Significant changes to facilities or additional facilities would be brought to the UK Board of Trustees for its consideration.

Eric Monday, UK's executive vice president for finance and administration, said several conditions will be met as part of any final public-private partnership agreement, including:

■ Employees with UK's dining services as of Feb. 13, 2013, will be ensured continued employment.

■ Student workers will continue to be employed with dining services.

■ Partnerships with existing campus outlets, such as the Lemon Tree Restaurant and the UK Butcher Shop, will be maintained.

■ Any agreement will make explicit goals and commitments with respect to buying locally produced food and using the Kentucky Proud program. That means expanding beyond UK's spending on local and Kentucky Proud products, which stands at nearly $1.8 million a year.

■ The agreement will be a public document.

An exploratory request for proposals that UK put out in November required any bidder to provide $25 million to $50 million to build new dining facilities to match the residence halls now under construction. Those terms will stand, UK spokesman Jay Blanton said.

Several companies turned in requests for proposals at that time, but UK did not release numbers or names of companies as is standard bidding process.

"In fall 2014, we will house over 21 percent more students than we did this past fall," Monday said. "Such growth is, without question, the right thing to do. We know from research that students learn better and do better when they live on campus. We must have facilities in dining and other areas that support that growth and that desire for expanded and healthier food options. Currently, we do not."

Monday also said the university isn't in a financial position to expand food offerings itself.

"A partnership with a third party with extensive expertise in this area offers the opportunity for millions of dollars in facility investment over the next several years," Monday said. "We simply do not have that capacity internally. Nor can we expect the taxpayers of this state to foot that bill."

Monday said all but two of Kentucky's eight public universities have moved to public-private partnerships for dining operations. UK and Murray State University remain the only institutions with internally run dining operations. Ten of the 14 Southeastern Conference schools use public-private partnerships for dining.

Lee Meyer, an agricultural economist at UK, has served on the committees that considered the various options.

"I think we did start down this path a few years ago," when UK started negotiating with Education Realty Trust, he said. "Decisions were made that led to this kind of outcome."

Meyer said his ideal outcome would have been some kind of cooperative between universities with their own dining services. But he said that UK officials now understand the importance of local food options, and private companies are expanding those options.

When Meyer reviewed some of the offerings by private food-services vendors, he said, "the other strength they brought are policies to encourage students to eat healthier foods."

Local food has become an increasingly active topic in Kentucky. For example, the Lexington-Fayette Urban County Government this week chose to fund the position of a local food coordinator.

The UK chapter of United Students Against Sweatshops took up the charge to defend UK's dining services because of what it said are problems posed by multinational companies such as Aramark and Sodexo.

"They don't have a place here, they don't view the Kentucky Promise the same way Capilouto does or the way we do," said junior Brock Meade, referring to Capilouto's definition of UK's relationship with the state.

Meade said students also are concerned that new employees would work for the vendor, which will probably offer lower pay and fewer benefits.

"President Capilouto's decision today is devastating for everyone at the University of Kentucky," said Jared Flanery, a senior and a member of UK-USAS. "The idea that we will profit from privatization is a false promise."

Linda Blackford: (859) 231-1359. Twitter: @lbblackford.

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