Ryerson University has spent more than $5.6 million in the last five years to cover losses incurred through its contract with its food service provider, according to a letter the university provided to the Ryerson Student Centre.
The university’s original contract with Aramark Canada, which operates its on-campus cafeteria food options, was a profit-and-loss contract but was amended to a flat management fee contract in 2006, according to Ryerson spokesperson Michael Forbes.
“In a profit-and-loss one, you build a revenue model and, as part of the contract, you figure out how the profits and losses split out,” Forbes said. “But since food is not profitable at Ryerson, and will probably never be profitable here, the contract wasn’t working.”
Forbes said the main reasons the amended contract has still resulted in losses is due to the hyper-competitive food market near campus in downtown Toronto, and the costs needed to pay the cafeteria workers that Ryerson employs.
“We don’t expect to make money from our food services because we don’t have a captured residence, don’t have a mandatory meal plan, and students can eat at over 300 places away from our small campus,” Forbes said.
Eric Newstadt, general manager of the Ryerson Student Centre, said this restructured contract is a bad deal for the school and its students.
“Normally, the most significant rationale for outsourcing is to transfer risks so that the university and public sector are off the hook for any losses. But here, the university absorbs all of the risks, pays for all of the losses, and Aramark walks away with a profit,” he said.
Newstadt said the student centre is strongly in favour of Ryerson pursuing a not-for-profit alternative that would see the school operating its own cafeterias, instead of the current for-profit model in place with Aramark.
“All of our research, all of our experience indicates . . . for-profit food services operators cannot deliver flexibility in terms of both price and quality,” he said.
Aramark could not be reached for comment regarding this issue.
Newstadt said he believes students also suffer from a poor quality of food provided by Aramark.
“The students get terrible, highly-processed, less nutritious, never-fresh food at an incredibly inflated price,” he said.
Jonny Friedman, a second-year Ryerson student, said he has heard an overall dissatisfaction from people on residence who have meal plans for cafeteria food.
“I’ve heard more about the poor food quality than the issue with the school covering these losses, and I haven’t heard good things about it,” Friedman said. “And a lot of my student fees are going towards [the food service operating costs] and Ryerson isn’t making that money back, so it sucks to see them to kind of be for nothing.”
Newstadt said the student centre has proposed two alternatives to the university that would see Ryerson gaining full control of food service operations, but both pitches were rejected.
Forbes said this was simply because Ryerson has to honour its contract with Aramark, which expires May 31.
He said the previous contract will not be renewed, and the new one will be issued after several companies, including Aramark itself, are given the opportunity to respond to a request for proposal (RFP) to be Ryerson’s new food provider.
“We have a committee, including students and staff, that will review those potential providers and then we’ll make the selection for the best provider for our school,” Forbes said. “I don’t know who it will be, but it will be a new contract with new terms as reviewed by this committee.”
But Newstadt said he does not think Ryerson is being diligent enough in its search, feeling they are rushing the process.
“Ryerson has shortened the procurement consultation of the RFP down to such an extent that the likely winner is going to be Aramark,” he said. “So they’ve put the fix in.”
Forbes rejected the notion, claiming the process is not rushed in any way, and any organization that meets the requirements they have outlined in the RFP is welcome to submit a proposal.
“Our search for a new food vendor will be open and transparent,” Forbes said. “The RFP will be publicly posted and widely circulated.”
