A recent report by the Office for Students warned that 40% of England’s universities are expected to run budget deficits this year – signalling that many are going to have to look at how they operate to ensure they can remain financially viable in the future.
There are a number of factors that have come into play in recent years that have contributed to this.
The pandemic had a massive impact, and whilst footfall has returned, student behaviour has changed post-Covid, partly shaped due to rising living costs and the resulting impact on student’s wallets. The last two Consumer Insights sessions we ran at universities revealed that more students are bringing in snacks and food from their houses to eat on-campus, whilst the ones that are buying food from campus outlets are favouring ordering big meals they can share with friends, or eating half now and half later. In a nutshell, there is less indulgence, more considered purchases and seeking out ‘sharing’ food occasions.
Brexit has impacted the number of EU students choosing to study in England, as they now face increased fees. Data from the Higher Education Statistics Agency shows the number of students from the EU who enrolled for the first year of an undergraduate or postgraduate course was down from 66,680 in 2020 (the year before Brexit came into force) to 31,000 in 2021.
Coupling these two factors with increasing food and labour costs creates the perfect storm for universities who are battling to find their feet financially.
There needs to be significant changes made before the situation deepens. One area that universities can review is their retail and catering operation. Nearly always, there will be ways to make the services more efficient and drive cost savings. Mark Kassapian, Managing Director at Litmus Retail, shares his top five tips:
- Operating efficiently can mean a few things – it can be ensuring that you have the right product ready to go at the right time so your sales are maximised, smart rostering so you don’t have surplus staff on, you have your best staff on duty at peak hours to ensure a quick service, advertising is aligned to the seasons and day parts, your directional signage is accurate, tables are turned around quickly and so on. This allows you to drive sales when students are there and want to spend.
- Tech innovations – such as Smart Fridges and Vending solutions – offer 24/7 food and drink, but without additional labour costs. Students can access these at any time of the day and night, particularly useful around exam season when sunrise or twilight studying goes on or for late night socialising. Innovation in this space has seen a wide variety of dishes such as pizza, noodles and ramen as well as porridge being able to be ordered, cooked and delivered within minutes – all from the machine. Be careful though and check there is footfall and demand for tech solutions, and it’s not just for novelty value. Every outlet within the catering mix needs to work hard, and savings on labour costs can be quickly eroded if the tech doesn’t deliver the revenue required to justify the investment and running costs.
- Make sure you nail the layout of any convenience retail services. Promotions or offers should always be around the entrance to attract attention and help to draw students in. Displays should be agile and changed during the day so they look full and have the right things in for the right day parts; fridges can be used for snacks and sandwiches until mid-afternoon then ready meals can be put in for the evening. If in doubt, it’s worth going to the nearest Tesco or Sainsbury’s and looking at their product range and grouping. They spend a significant amount of resource looking at exactly these things in a hugely scientific way that a single entity cannot possibly repeat.
- Internal hospitality can seem like an easy saving by just putting a stop to it but beware! If you lose control of the spend you lose control of food hygiene, allergen and nutrition info, supplier accreditation, standardisation, and sight of how much is being spent. If that revenue is kept internal to the university, the margin stays within your catering department rather than going external. Also don’t forget that the labour cost supports your catering team and the department is set up to handle the ordering, charging, delivery and collection processes that saves huge time for your support teams. Finally, your sustainability aspirations can continue to be met by the catering teams rather than external parties who do not and will not, perform to the same standards.
- Talk to colleagues, share best practice, walk the high street and see what is happening – or just call us!
If you’d like help reviewing your university catering services, then contact us here
The Litmus team