Some dining operations close to breaking even
By Irene C. Kuo
Walker Dining Hall, Lobdell, and Networks should show profits in two years because of their locations and markets, according to Lawrence E. Maguire, director of housing and food services. He added that these profits would have to be large enough to cover the ten-year $4.9 million debt service on the latter two facilities, which were constructed last year, and on the Faculty Club, which is undergoing renovations.
Walker is close to breaking even. When Lobdell closed, services in the dorms and at Walker expanded, but now that Lobdell is open, services at Walker will be reduced, according to Ken Miller, general manager of food services. For example, hot breakfasts will no longer be served there.
"It costs MIT $55,000 a year to offer this service at [Walker], but the number of customers just doesn't justify keeping it," he noted. "There are seven places on campus that serve hot breakfasts, but MIT is not an early morning place, and there are not enough breakfast eaters."
Maguire, however, doubted that profits from Walker, Networks, and Lobdell, which comprise the "cash houses," would ever be large enough to cover losses from the dormitory dining halls. 500 Memorial Drive, for example, serves only 50 people in its two-hour lunch period. Despite these financial losses, services in dormitory dining halls probably will not be reduced. "MIT doesn't mind subsidizing the dormitory dining halls because they are part of the educational program. They are places where students can interact," he explained.
The only way the trend of losses might be reversed would be to change meal plan requirements, according to Maguire. Under a proposal to require all dormitory residents to buy meal plans, "the base would be broadened, and the [dollar] requirement would decrease," he said. However, this plan would need a lot of leadership, communication, and student involvement in order to become palatable to all students, since it elicited sharp opposition from representatives of dormitories without dining halls and strong support from those currently on mandatory plans at a meeting last year.
Lobdell and Networks have experienced steady increases in customer accounts and dollar sales since they opened, but MIT Food Service and ARA will continue to evaluate hours of operation and the products that should be sold, according to Miller.
Lobdell which has been open for 5 months, is just starting to break even and currently serves 23,000 people a week, up 20 percent from the old Lobdell, Miller said. Sixty percent of its customers are Validine card-users.
"The Features section, serving ethnic dishes, has had limited success. In addition, we are still trying to better use the hot entree space and to increase activity there," Miller explained. "We tried not to serve hot entrees one Saturday, but we got lots of negative student response, so we brought the section back. We want to increase variety and to improve design in the dessert section. The speed of service in the grill section could be better." Miller said that the managers were making changes, but that it would take at least two years for them to settle on products and hours of operation.
He claimed that recent changes in some dishes at Lobdell were not part of any cost-cutting scheme. "The old french fries did not hold heat well, and this may sound funny, but we thought that they didn't look good on the plate," he explained, referring to one such change. "We also decided to hand-form the hamburger patties to make sure that they were fresh, not frozen." He added that the weight of the patties did not change and that sandwich meats were the same.
Networks serves 1,100 people a week, according to Miller. Fifty to 60 percent of the customers are students, and the rest are faculty and staff. The Institute has not decided whether or not Networks should advertise in the "outside world." He stressed that Networks' purpose remains to serve MIT students, faculty, staff, and guests.
"MIT spends a lot of money on off-campus food, and [our hope] is that Networks gets some of that business," he said. He added that it takes two to three years for restaurants in this area to break even.
Lobby 13, the Cookie Cart, the Bagel Wagon are profitable operations. He doubted that the Bagel Wagon would ever accept Validine cards because it would be too expensive to install telephone lines and sources of power.
Some employees had to be laid off this spring as food-service management became acquainted with how Lobdell operated, Miller said. "Business in the four dormitory dining halls has been considerably down compared to the same time last year. Most of it transferred to Lobdell when the Student Center re-opened, but this fall, we started with the same staff size in the dorms as last year," he explained. MacGregor Dining Hall lost one employee, McCormick lost one and a half, and Baker lost two. In addition, student hours at Pritchett were reduced because Pritchett's lunch service "duplicated" Walker's.
Miller said that the employee turnover rate is high, despite high wages, good benefits, and a liberal sick-leave policy. "Although [MIT Food Service's] wages for cooks and dishwashers are probably higher than anywhere else in Boston, there is just a tremendous number of jobs in this area." He added that on any given day, 10 employees out of the total 200 on campus are absent from work.
The turnover rate for managers is "higher than industry standards," for a variety of reasons, according to Miller. "Last year was difficult. We were opening Lobdell and Networks. [The dining halls] took a lot of pressure off while Lobdell was closed, but a lot of food was transported, and the summer was busy. People got worn out." On the other hand, turnover of managers at Walker may be high because the building is "difficult to work in -- it's old and needs repairs and renovations."
Relations between MIT Food Service and ARA had a "rocky beginning," according to Maguire. "[ARA] had problems with management and turnover. They had to deal with transitions, like the closing of the Student Center," Maguire noted. "But my sense is that ARA is trying very hard to do a good job. They have recently made changes in their financial approach necessary for us to achieve our objectives."
Under their five-year contract, which expires in two years, ARA receives two percent of gross sales, and MIT assumes the remaining financial responsibilities, whether profit or loss.
As far as student programs go, we have an exceptional dining program. The dorms have kitchens and dining halls. Schools like B.U. and Harvard have a unified meal plan like 21 meals per week. MIT subsidizes the meal plan requirement by half a million dollars a year.