University of Kentucky takes big step toward outsourcing dining services to Aramark

lblackford@herald-leader.comJune 10, 2014 

The University of Kentucky is poised to sign a sweeping contract to replace its in-house dining services with those of a multinational corporation that will provide the university with tens of millions of dollars in new dining areas and several perks.

The proposed 15-year contract with Aramark would guarantee about $245 million in buildings, renovations and commissions to UK while lowering current dining prices for students.

The UK Board of Trustees approved Tuesday the construction piece of the contract, which paves the way for university officials to sign the entire agreement.

The idea to outsource UK's dining services came up more than two years ago — amid controversy on campus and in the community — after it became clear that a private developer building several dorms on campus would not build commensurate dining spaces. That led UK to search for a company big enough to take on new construction in return for UK's growing food business.

UK officials said the long process, which included numerous public forums, helped create a better contract for UK.

"The process and the feedback we received from students, faculty, staff and members of the community were critical in arriving where we are today: with a potential partnership that will give us a best-in-class dining operation for UK and those we serve," said Eric Monday, UK's executive vice president for finance and administration. "In particular, the feedback and constant engagement compelled us to focus intently and strategically on issues such as how best to protect current and student employees, the importance of Kentucky Proud, local food sourcing and sustainability, and creating a partnership that honors the values of our land-grant tradition."

The contract, as described by university officials, stipulates:

■ All current UK Dining employees — about 100 full-time workers — will continue to be employed with full UK salaries and benefits for as long as they wish to work for Aramark. UK expects the current number of employees to grow to about 200, with 500 student employees.

■ The current meal plan will be cheaper. The most expensive meal plan will drop 26 percent, from $2,841 a semester to $2,100. The smallest plan, about seven meals a week, will drop 2 percent to about $1,325 a semester.

■ Aramark will spend $52.7 million to build and renovate dining spaces, including a $32 million New Commons building across from the W.T. Young Library. The 81,000-square-foot building will have dining areas, classrooms, and office space for faculty and staff. Other upgrades will include a new K-Lair in the new Haggin Hall, plus new dining spaces in King Library, the Champions Court dorms, the new Academic Science building and the renovated Gatton College of Business and Economics. Aramark will provide all the equity for the construction, but UK will own all new and renovated spaces.

■ Aramark will provide a $17 million contingency fund for future modifications of dining spaces.

■ Aramark will give UK $14.75 million in cash, including $10 million to renovate Patterson Hall, a historic building on north campus.

■ Aramark will provide $5 million for a food innovation center in partnership with the College of Agriculture, Food and Environment, and pay for a full-time dining sustainability coordinator.

■ Aramark will provide more restaurant choices on campus, including what officials say will be the first Panera restaurant on a college campus. Other new businesses are to include Common Grounds coffee, Taco Bell, Greens to Go, Aqua Sushi and Einstein Bagels. There also will be new wellness and nutrition initiatives to help students eat healthier.

■ Aramark will increase purchases of local and Kentucky Proud products from UK's current $1.8 million a year to $2 million a year in the first year, with a 5 percent increase each year after. If Aramark doesn't meet these and other thresholds, including student satisfaction, it will face penalties of between $100,000 and $150,000 a year.

■ UK is scheduled to get about $126 million over the 15-year contract, including $95 million from food sales and $16.5 million on all sales at UK athletic venues, which Aramark will control. In addition, Aramark is to reimburse UK for about $28.6 million in utilities and $4 million for maintenance each year.

University officials said a copy of the full contract between UK and Aramark will not be made public until it is signed by UK officials.

Monday, the UK vice president, said Aramark expects to break even on the contract, with real profits only coming with student growth.

"By introducing new retail venues, adding more choices and increasing value with meal plans, we are confident that the program will grow, benefitting the university, its students, faculty and staff, as well as Aramark," said Karen Cutler, director of corporate communications for Aramark.

Small groups of students and residents have repeatedly protested UK's plans to outsource dining. One trustee, Sheila Brothers, who represents UK staff, abstained from voting Tuesday in both the finance committee and the full board meeting.

"I understand the vast amounts of money available to the university," Brothers said. But "in my opinion, I believe Aramark's bottom line remains their financial success, and I believe an operation run by UK and for UK is best for us."

Ernest Yanarella, a politics professor and a former staff trustee, also urged the board to vote no.

"Given the sweetheart deal UK has negotiated, at whose expense will this long-term profit making and UK commissions come?" he asked. "At the expense of workers, who will be increasingly pressured by management for Aramark to squeeze out profits. At the expense of dining hall customers — mostly UK students — who will see the quality of the food suffer over the long run."

Several other trustees spoke in favor of the deal, which they said would continue to change UK's campus for the better.

The plan "successfully balances public and private interests" and represents "real opportunities for innovation," said trustee David Hawpe. "This represents good stewardship, and that's why I'm going to vote for it."

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

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