ARA wins contract, will take losses
4.5i on front page
(By Bill Jackson)
ARA will provide food service to the MIT community for another five years, Senior Vice President William R. Dickson '56 announced last Wednesday.
The decision was based on the recommendation of a committee formed to review food service proposals. The new contract is unique in that it is based on a "profit-and-loss" system instead of the previous cost-plus-management-fee arrangement.
The committee has been meeting since April to choose the new contractor. Four companies, ARA, Marriott, Daka, and PFM, responded to the initial Request For a Proposal (RFP). Committee members assigned a score to each of the four companies in several categories, such as finances and marketing. Daka and PFM
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were "never really in the running," according to one source, due to flaws in their plans for service and "unrealistic finances."
The RFP sent out by the committee stipulated that for the first year, the four dormitory dining halls would be open for dinner only, with required meal plans for house residents set at $500 per semester. In addition, service at Lobdell Court and Walker Memorial Dining Hall had to be maintained.
According to one student on the committee, Michael S. Gull '92, ARA was the only company willing to "take the risk" and accept the profit-and-loss plan in its entirety.
ARA has proposed to turn Networks Restaurant into Hacker's Haven, designed as a place for students to "hang out," watch television and play board games, which would be available in the restaurant. The restaurant would feature diner-style food, and the walls would display pictures of famous MIT hacks.
Committee members differed on what they believed ARA's plans are for the house dining halls and Pritchett Lounge beyond next year.
Some members claimed that ARA's projections of future profit depend on closing the house facilities and Pritchett after next year. Others said they assumed ARA calculated their income based on all five years of the contract running like the first year, with house dining halls open for dinner only.
ARA also plans to continue the somewhat controversial Domino's pizza delivery service. The company hopes to expand to other delivery services, including buffalo wings and Chinese food.
Lawrence E. Maguire, director of housing and food services and chair of the search committee, said, "We wanted a food service as unique as MIT."
The profit-and-loss contract is believed to be the first of its kind in a university setting. Under the system, Maguire said, "ARA now has incentive to respond to the market. You're going to see salesmen out there now."
Associate director of food service John T. McNeill agreed. "Now they've got to please you in order to make you spend your money. The community will see a `can we be of service' attitude from both MIT and ARA." McNeill also stressed that the new system was a two-way street that would only work if there was cooperation between ARA and MIT as a whole.
Six administrators were on the 11-person committee. Ken Wisentaner, another associate director of food service, was procurement resource person to the committee, but was not a voting member.
The remaining five members gave higher overall scores to ARA. These were Maguire; McNeill; Stephen D. Immerman, director of special services in the office of the senior vice president; James R. Tewhey, associate dean for student affairs; and Doreen Morris, assistant to the provost and to the senior vice president. The lone professor on the committee, Gordon M. Kaufman of the Sloan School of Management, also gave ARA his vote.
Of the four student committee members, only graduating senior Paul L. Antico '91 gave ARA a higher score. Robert H. Kassel G voted for Marriott, as did Emily R. Prenner '93. The fourth student, Gull, scored the two companies equally but said that although he wanted to vote for Marriott, that company "did not respond appropriately to the RFP."
Former Undergraduate Association President Antico admitted that he went into the meetings with a bias against ARA but that their proposal showed "they've now started to understand the needs of the MIT student." He and Prenner stressed that the current committee was planning to evolve into a standing UA committee on food service. "We're going to be a constant check on ARA," Prenner said.
Kassel, who was also on the food service selection committee of five years ago, said that ARA's proposal was "gimmicky" and not genuinely responsive to the needs of the community.
"You hear `Hacker's Haven,' and you think that is a unique response to the needs of the community. But is that what MIT students really want? It shows that ARA is still treating MIT as if we are a big midwestern university. Maybe people at big midwestern universities have time to sit around, eat french fries, and watch TV. MIT students just want decent food and hours that match the way MIT people live," Kassel said.
Kassel added that the Marriott proposal offered a 24-hour restaurant with more "basic" menu items rather than fast food. "[ARA's] marketing plan relies more on fancy logos, while Marriott was more concerned with better hours and service."
Kassel also questioned the company's incentive under the new plan. "ARA can make more money if they close the house dining halls. They have no incentive to make them work."
Kassel, a graduate resident tutor at MacGregor House, argued that it would be to the company's advantage to run the house dining halls poorly next year, so that there would be less objection to closing them down. "MIT is very bottom-line oriented. It's far easier to close unprofitable facilities than to find approaches which make them self-supporting."
Gull, the only committee member currently on a required meal plan, said that he was "disappointed, overall, with the quality of the proposals. ARA was the best of the mediocre."