The University thought it hit the gold mine with long-term multimillion-dollar contracts with Coca-Cola and Aramark in 1996 and 1997. As a result of those contracts, all aspects of beverage retailing on the University serve only Coca-Cola products, and Aramark operates nearly every aspect of vending, retail, catering and residential food. But because of poorly made University decisions, it will not be until contract negations in 2006 and 2008 that the pilfering of student pockets will cease.
Aramark is the third-largest food-service provider in the world and Coca-Cola is the largest drink company in the world, but the problems arising from the contracts are not due corporate conquest. The problems lie in the representative partnership between the University and Aramark, University Dining Services. In contrast to its work with other universities, Aramark is required to work through UDS, resulting in yet another cost attributed to “overhead.”
Besides imposing University power over much of Aramark’s operation, the University charges full market price for the space used by the food service. Additionally, due to the Coca-Cola contract, Aramark is forced to buy syrup through the University. The University’s actions as profiteer and middleman removed large amounts of profit margin for Aramark. However, in the battle of dollar-fisted entities, students ultimately lose.
The profits siphoned from Aramark through the Coca-Cola contract are mainly funneled to athletics and grants. Previously, profits from dining facilities were used to subsidize the meal programs and keep prices down. According to then-Vice President of Student Development and Athletics McKinley Boston, in 1996, after beverage revenues were removed from the food service, deficits began to accrue. Not surprisingly, a large portion of the Coca-Cola funds went to pay sports administration salaries rather than subsidize meals. 1999 Senate Finance minutes show more than $240,000 of the annual Coca-Cola revenue went to athletics. The number is certainly larger now.
The effects of the contracts tend to focus costs on the temporary status of students, especially undergraduates. Faculty Consultative Committee meetings from July 2000 even refer to residence hall students as “the captive audience” and stressed concerns about the viability of the food service depending on “half the operation with a captive audience.” The captive audience in question is the residents of Bailey, Centennial, Comstock, Middlebrook, Pioneer and Sanford halls. Indeed, if students were given a choice, UDS would rightly lose out. As a result, students living in residence halls are victimized and are unjustly required to purchase meal plans that are expensive, uncompetitive and extremely detractive in measure. Administrators argue higher prices result in higher quality. But everyone who has eaten a residence hall meal knows that the “gold begets caviar” philosophy is untrue and the grandest of issue-avoidance techniques.
The scheme rendered against residence hall students is not the only fallout from the incompatibility of the Aramark and Coca-Cola contracts. The encompassing nature of both contracts has prevented the University from entering more lucrative agreements with other business entities. The Aramark contract was the main factor in the University’s decision to close the immensely popular and progressive Cafe World in 1998. Every food vendor in Coffman Union is an extension of the Aramark Corporation. Promises to incorporate independent local businesses into Coffman are and probably will remain unfulfilled. The virtues of competition are compromised, and as of yet, there is no incentive for UDS to change.
The major players in the contracts are no longer involved with the University. Associate Vice President for Student Development & Athletics, Housing and Dining Services Ron Campbell, Boston, Yudof and 11 of the 12 deciding regents all have moved on. Yet the consequences of their decisions remain.
Minnesota Student Association members repeatedly requested to be part of contract negotiations and processes. However, student representatives were barred from the Aramark and Coca-Cola contract negotiations, thus stifling any public debate.
The Coca-Cola/Aramark/UDS debacle provides three lessons – mainly, the treachery posed by signing long-term contracts without serious analysis and debate, the conflict of interest presented by sports directors being allowed to negotiate University-wide contracts and the absolute necessity of student representation during matters which will have large financial effects on current and future students.
Granted, the faults of the Aramark and Coca-Cola contracts are spilled milk. But it is only through being forced to clean up the mess and drink that spoiled milk that change can occur.
Karl Noyes is a member of The Minnesota Daily editorial board and a University freshman.
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