The Xanterra-operated Carvers Cafe at Mount Rushmore National Memorial communicates its prices on a standard over-the-counter menu board.

How commercial can you be when you’re supposed to be noncommercial? That is the dilemma facing directors who must formulate retail foodservice pricing strategies in onsite environments.

In an era when onsite dining is often expected to “contribute” to the financial bottom line of the host organization, or at least pull its own financial weight, effective retail pricing is a critical component of operators’ fiscal health. In sites where retail operations complement revenue streams from board plans and patient dining, an effectively priced retail end is often the difference maker between a middling bottom line and a sparkling one. And where retail is the exclusive type of foodservice offered—as is increasingly the case in B&I and even some institutions—effective pricing is absolutely critical.

Fortunately, the traditional view that onsite dining is “noncommercial” seems to be eroding as consumers become more accustomed to paying market prices for goods and services in all sorts of environments, even in onsite foodservice where subsidized dining had always been seen as an amenity.

“The nonsubsidized model in onsite foodservice is still relatively new,” cautions Georgie Shockey, principal for the Ruck- Shockey Associates consulting firm. “It will take a while to get to the commercial operating model, but that is definitely the direction it is headed.”

How far to push commercialization depends of course on the segment and the particular venue. In many colleges, for example, straight-out retail pricing outside of the board dining hall is now a given, while in healthcare, a lingering sense of entitlement to a subsidized dining amenity by the staff sometimes impedes price restructuring. The 2006 HFM Membership Survey, for instance, indicated that nearly four in 10 hospitals continue to offer employee discounts in their retail food operations.

B&I has seen a de-emphasis on subsidy in recent years. Sometimes, that has resulted in the elimination of the inhouse dining amenity altogether, but in many other cases, the result has been an evolution toward “street” pricing and a sink-or-swim P&L approach that has challenged the operator—most often an outside contractor—to tackle the street head-on.

The aggressive commercial pricing mindset necessary to be successful in this competitive arena may not come naturally to operators weaned on the more forgiving attitudes (and bottom line expectations) of traditional onsite foodservice, but it is an increasingly necessary skill.

Here are some suggestions for improving your pricing strategy and embracing your inner capitalist.