If there was ever a management company that earned its reputation one meal at a time, that distinction would have to belong to Bon Appétit.
It is a company with a heartbeat that emanates from the kitchen, but a kitchen that operates in full view of the customer. The firm’s indelible trademark—a culture of fresh food, authentically prepared and created for each account by dedicated chefs empowered to customize and deliver it—has redefined the high end of food expectations in the managed service environment.
Over the 15 years since its founding, Bon Appétit has evolved from a boutique, regional catering company into what many believe has been one of the most influential players in the onsite foodservice community. In 2001, it had sales of close to $300 million in 21 states, making it the seventh largest foodservice management company in FM’s “Top 50.” Still, it retains the culture of a much smaller firm, focusing almost exclusively on business dining and foodservice at private colleges and universities.
| At a Glance Name: Bon Appétit Management Co. |
Headquarters: Palo Alto, CA
Annual Sales (FY 2001 est.):
300 million *
CEO: Fedele Bauccio
Accounts: 150 accounts; 185 locations
Business Dining— $140 million *
Higher Education—$155 million *
Specialty Markets—$ 5 million *
* FM estimates
Above all, Bon Appétit seems to exist as a culture of chefs, cultivated and nurtured by co-founder Fedele Bauccio, who has clearly enjoyed a unique role as both chief executive and something of an executive chef himself. Company employees all have a story to tell about a hands-on visit he has made to their kitchen.
“There isn’t a chef in this company who can fool me with shortcuts,” Bauccio is fond of saying. “I grew up in the kitchen and have always been a food nut. Being Italian doesn’t hurt, either.”
One is tempted to categorize such remarks as image-building hyperbole. But the feeling is tempered by Bauccio’s insistence that you judge Bon Appétit’s product by onsite visits rather than by his word.
“The trade press frequently emphasizes the look of the café, the design issues,” he says. “Many of our accounts do have wonderful cafés, but in this business you just as often have to operate in older facilities. We want your attention on the food. If your attention is there, the facility is only a secondary concern.”
The story of Bon Appétit could easily be a business school case study illustrating the power of an entrepreneur’s vision to focus first a company culture, and then a major business enterprise. In retrospect, that is not surprising. Bauccio and many other individuals involved in Bon Appétit’s formation (including Ernie Collins, who would soon become his partner) all shared a common heritage rooted in the culture of an equally enterprising contract company from an earlier era—the Saga Corporation.
Long an industry pace-setter, Saga’s saga was coming to an end in 1986. Marriott Corporation, then on an acquisition binge, had negotiated a deal to acquire it, a precipitating factor that spawned the original partnership between Bauccio and Collins. Both men were looking at a future in which their positions were about to disappear.
Although most of his 25 years with Saga had been on the contract side, Bauccio in 1986 was serving as president of its specialty division, which consisted of a number of commercial restaurant chains and some hotel foodservice operations Saga had acquired in a diversification effort several years earlier. Marriott had announced its intention to sell that division off, so Bauccio was looking to start a new career. Collins was in a similar situation. As corporate counsel, his was one of several positions due to be eliminated because of duplication at Marriott corporate offices.
“Looking ahead, my alternative was to look for another general counsel position. That simply didn’t appeal to me,” says Collins.
What did begin to appeal to him was Bauccio’s idea of starting a new company that could offer a more customized kind of foodservice than that available from other management companies at the time.
Then, an unusual opportunity presented itself. “I met the owner of a small catering company with a wonderful name and a great reputation for catering in the field,” Bauccio recalls today. “He could go to a warehouse and turn a catered meal into a terrific event by doing display cooking on site.”
“I went to some of his events and saw a chance to do the same thing—not as an event caterer, but in the cafeteria lines where I had spent my earlier career. The owner was looking to sell the business, so Ernie and I raised the money and bought the company. And that was how the Bon Appétit we know today started out.”
The early years
In those years, “Fedele’s strongest suit may have been his ability to sell the new company— not only to prospective customers, but also to prospective employees,” Collins recalls. “He was intensely passionate about his vision and was able to communicate it to the people he needed to make it happen.”
For his part, Collins brought administrative skills the young company needed to convince investors the vision was a realistic one and that Bon Appétit was developing an infrastructure to support it.
Soon, Bauccio had landed Bon Appétit’s first corporate account—the Bear Stearns office in San Francisco. The next year, it added Xerox and then the Santa Catalina School in Monterey.
Fedele’s brother, Michael, who also had had an earlier executive career with Saga, joined the company in 1988. His experience was in higher education and he immediately brought it to bear on its goal of making that segment a major focus of Bon Appétit’s marketing efforts.
“We knew there were traditionally a lot of shortcuts taken in higher education,” he says today. “We also knew that private schools compete for students just like corporations compete for the best employees. We were sure we had something to offer them.”
Soon, the company had landed contracts at Stanford, Biola and Woodbury Universities. By 1990, Michael Bauccio had set his sights on several accounts in his old territory in the Northwest as a way to move beyond California’s borders. Lewis and Clark in Portland, signed on, followed soon after by other schools in the region.
“We knew if we could do well in the Northwest that other business would follow,” Michael Bauccio recalls. “In fact, our growing reputation in the college market became very helpful in developing corporate accounts in the region.”
Back in California, this was also the time when Bon Appétit began to establish its reputation as a premier foodservice provider among the firms springing up in Silicon Valley. It gambled on the future growth of companies like Netscape, Silicon Graphics, Oracle and Cisco Systems, sometimes taking on promising accounts with fewer than 200 employees. Many of these became the engines that drove Bon Appétit’s growth in the 1990s.
Meanwhile, Bauccio and Collins were determined to put decision-making power at the unit level. They foresaw an era in which customers would demand more personalized service and wanted to build a company culture that could provide customized foodservice programs at each account.
For Collins, that meant giving managers as much control over an operation’s finances and client relationships as possible.
“We wanted to have management information and financials entered by the unit manager, to have him produce his own financial reports and billings,” says Collins. “We were one of the first to put a PC in each unit and to make that network the basis of our management information system.”
The chef as unit operating officer
From Fedele Bauccio’s standpoint, offering truly customized food programs meant empowering unit chefs to develop menus, food presentations and cuisine in direct response to feedback from the individual customer.
“We wanted to give them a blank piece of paper and let them be creative,” he says.
In execution, that was easier said than done. But by recruiting chefs who shared the company’s passion for fresh food quality and by giving them unprecedented authority in its accounts, Bon Appétit began to grow a new kind of operating philosophy.
“We never sought to attract the traditional institutional foodservice manager, those who operated primarily as production managers,” says Michael Bauccio.
“Instead we looked for talent in retail restaurants, in country clubs. We wanted out-of-the-box managers who could make the transition from the back of the house to the front of the house, who could communicate effectively with our clients. ”
Bon Appétit offers no cycle menus or corporate concepts. It de-emphasizes signage, preferring to focus the customer’s attention on displays of raw product, daily food offerings and exhibition cooking.
Rather than standardizing food programs, it has nurtured an elaborate “Chef’s Exchange” program that encourages cooperative sharing of individual menu innovations, special event cuisine and recipe developments. Chefs do borrow and learn from one another, but this is a practice the company facilitiates, not one it manages.
In fact, most of Bon Appétit ’s management at all levels can look back to an earlier part of their career spent on the culinary side, although there are exceptions.
Carey Wheeland, now a regional vice president, is one of these. Another Saga grad, Wheeland followed Michael Bauccio to Bon Appétit in the late 1980s.
“I’d spent my career to that point controlling costs and managing chefs,” he says.
“Michael told me, ‘If you work with Fedele, the chef is going to run the show.’ It was a big transition for me. But a lot of us have been successful because we are change agents who think like chefs. We look for the ingredients that will make the whole thing work—the people, the menus, the service— whatever it takes, every day.
“From the beginning, Fedele trumpeted the value of the professional chef and the importance of having a stock pot in every kitchen,” he adds. “He was adamant that the food be as fresh as it possibly could be; that we use fresh meat, seafood, vegetables in every account. Every chef had to operate with this fundamental doctrine in mind.”
“That doesn’t mean branded concepts are necessarily verboten,” says Michael Bauccio. “We are flexible, and there are college campuses where you must offer branding as an option. At Seattle University you’ll find us running Taco Bell and Pizza Hut operations..”
The move into higher education
The higher education market has become increasingly important to the company’s future. And it meant moving from its comfortable, West Coast base into new territories.
“There was clearly a limit to the opportunities for us here,” says Michael Bauccio today. “The big densities for private schools are in the Midwest and East. We had to look at our long term plan in that light.”
Bon Appétit first entered the Midwest in 1991 when it acquired the contract business of Consul Food Service Co. in Minneapolis. (Consul’s president, John Nelson, was yet another former Saga executive.) The purchase brought Bon Appétit several highly visible accounts, including the headquarters operations of Target Department Stores and Carlson Company (parent of TGI Fridays). In the next few years, several private colleges in the region followed, as did a move by the new Midwest team down to Chicago and St. Louis, where it signed Wheaton College and Washington University.
By 1995, Bon Appétit had moved East, opening college accounts in Massachusetts, New Hampshire, New York and Pennsylvania. In 1998 it was selected to run the foodservice operations at the University of Pennsylvania, its largest account in that region.
Last year the company enjoyed another coup, when the foodservice programs of Wheaton College and Washington University took first and second place for their dining programs in the influential “Princeton Review” list that annually rates various aspects of campus life at leading U.S. colleges.
A decentralized structure
Not all of Bon Appétit’s growth occurred easily. One of the biggest challenges was attracting culinary and management talent in the new markets, where it did not already have a presence.
“We now have established regional management teams to support new accounts that come on. But it was very difficult at first,” admits Michael Bauccio.
Bon Appétit’s management structure remains decentralized. There are four operating regions, each run by a regional VP, with business about evenly split between P&L and management fee accounts.
Although the company primarily operates in higher education and business dining (plus a few accounts like Pacific Bell Stadium and the Monterey Acquarium that it refers to as “specialty” foodservice) it has purposefully avoided the divisional structure that larger competitors employ. District managers are limited to supervising a maximum of eight to 10 accounts, which can include any type of Bon Appétit business.
“We think there is great advantage in having managers operate in both spheres,” says Fedele Bauccio. “We do not make a distinction between food we serve in colleges and what we offer in corporate accounts.”
“Our managers also sell,” he adds. “We have only two business development positions in the company. The rest of our growth comes from people who have to deliver on their promises. We think this is much more effective than having a dedicated sales team.”
As the company has grown, it has required increasingly sophisticated data management to support its decentralized operating approach while still providing regional managers with tools to manage the business. Over the last two years, Collins has overseen the implementation of a new Oracle-based accounting system and a webbased system that will simplify payroll for account managers. It also purchased software to consolidate data from its broadline and specialist distributors, a move that “will help us leverage our purchasing power more effectively in the future,” Collins says.
On the purchasing side, Bon Appétit negotiates regional deals with preferred distributors and encourages (but does not require) chefs to buy from them. A purchasing council made up of chefs and managers evaluates products on a monthly basis and recommends those it believes are best suited for unit use. But, “each unit still has the autonomy to not follow those recommendations,” says Collins.
Peering into the future …
What is in Bon Appétit’s future?
Despite its many successes, the company faces some continuing challenges. An obvious one is its still-significant reliance on Silicon Valley accounts. The business recession has hit that sector hard, with many of the clients that were Bon Appetit’s traditional bastion of strength downsizing workforces or implementing catering moratoriums.
Longer-term, Bon Appetit must deal with the increasing globalization of the B&I market, with the largest contractors offering international contracts to key accounts. That trend is another reason why a significant amount of Bon Appétit’s future growth will likely come from higher education.
Others note issues such as the more unionized operating environments prevalent on the East Coast, which may complicate the execution of Bon Appetit’s high culinary standards. Some also point to the majority stock ownership of Bon Appetit’s held Japanbased Shidax, asking whether a change in that relationship could at some point mean a change in the company’s management philosophy.
Both Bauccio and Collins downplay the last question, saying that as an investor, Shidax offers the company more stability than it would have as a publicly traded entity or one backed by venture capital.
But clearly, the largest challenge Bon Appétit faces today is that of retaining the entrepreneurial vision that has sustained it for the last fifteen years as it grows. Fedele Bauccio is adamant that it can, arguing that the culture of chef-driven operations has become so ingrained in the company and its managers that they will reject anything that threatens it.
“It is absolutely more important to us to maintain what we have than to grow,” he says. “Frankly, I do not know how big we will get. $500 million a year would probably be the next target, but I cannot tell you when or if we will reach that size.”
His managers and chefs seem to recognize the job that is before them. Says Cary Wheeland:
“Our challenge is to stay small, even as we grow, to retain this feeling we think we have that no one else in the industry has.
“It’s the idea that we come in each morning motivated by our own destiny. We have to feel free to tell a competitor, ‘take all the pictures you want,’ knowing that, culturally, they cannot do what we do.
Fedele Bauccio: “A Keeper of the Dream ”
Fedele Bauccio’s personality is fiery when provoked (as it is when you suggest that other management companies also seek to provide fresh food like Bon Appétit’s.)
“Many companies have copied us,” he will say, suddenly pounding his desk. "But no other company can do what we do. They do not have the structure or the passion.”
Moments later, asked if Bon Appétit has developed manuals to standardize operations, that temper again flashes to the surface.
“No manuals! No manuals! No manuals!” He almost shouts, again punctuating the phrases by sharp pounds with his fist. “We do not need manuals. We need managers tasting food in the kitchen, in the servery, in the café. That is where our standards come from.”
For a closer read of Bauccio’s views on other issues related to the company’s direction, FM recently interviewed him in his Palo Alto offices.
On the Bon Appétit brand: “When people think of Bon Appétit , I want them to think of great-quality food that is natural, healthful and honest—not necessarily pretentious.
“In 1986, you saw a huge push for sous vide, for convenience foods, for eliminating labor. The industry was getting away from real food prepared from scratch.We saw a niche out there for a company that wanted to deliver real food.
“We didn’t know or care how big it would get. But we discovered the niche was wider and deeper than we thought. From the very beginning, our differentiation in the marketplace has been the product, and for us, the brand is critical. Everything you touch, feel or see should say what we are about.
“We use the word ‘dream’ a lot here.We had a dream to create unique food and a unique brand. No one should be in this organization if they are not willing to spend time in the kitchen to ensure that the food is what we say it is.We have 8,000 employees now and the challenge is to make sure that, as we grow, this vision remains constant.”
The target market: “Bon Appétit is not for everyone. There are accounts we refuse to bid on because they would clearly not be a good fit.We work very hard at keeping the brand unique, and that entails interviewing
prospective clients carefully. “If the client is primarily concerned with the financial return, or how we will handle particular operational issues, we are not likely the best provider for their needs. But if the client is concerned about building a sense of community on its campus or in its business by ‘breaking bread’ together, it will be a good fit. We are best when we are there to help a client build its culture.”
The limits of growth: “Bon Appétit has grown at a compound annual rate of 20 percent almost every year since its founding.We probably can not continue at that rate but we expect to keep our growth in the double digits.
"Why? Because we can’t sell 20 colleges a year and do them right! We can only take on four or five colleges and 10 or 12 corporate accounts a year and meet our own standards. If we tried to change that, we would probably end up like everyone else.”
The manager’s role: "Ever since we started, I have had the idea that our key people carry three primary responsibilities. They have to manage operations. They have to grow and sell the business. And they have to make sure that their people are hired and taken care of—the HR function. They have to keep sales, operations and HR juggled all at one time, and this is what we hold them responsible for.”
Bon Appétit’s relationship with Shidax: “We have had a long relationship with Shidax (the Japanese company that is Bon Appétit’s majority stockholder). At one point when I was at Saga, I helped train the founder’s son. So there was an informal relationship for a long time. Over time, Shidax has become a majority stockholder in our company.
“We had a number of investors in the beginning, and Shidax has essentially replaced them. Shidax wanted to gain some experience in the U.S., to better understand the foodservice market here, to better see where it is going and to bring that knowledge back to Japan. The company operates over 2000 locations there, and about half of them are foodservice operations.We have often exchanged people as part of our relationship. But Shidax is primarily an investor in Bon Appétit. It is not active in our management.”
On further expansion into ‘specialty markets’: I would describe our possibilities there as opportunistic. If there is a good fit and the business enhances our brand, we will do more of it. But we are not looking to that area to be a particular growth driver.
We would love to do more stadium business.We have a unique niche with Pac Bell Park, and do only specialty boxes and club level foodservice there. But it was also a unique opportunity because a lot of the suite owners are our corporate clients. There could be additional opportunities in that area.
We do operate several commercial restaurants—the Twenty Four, next to Pac Bell Park, one at the Getty Museum, the Portolo Cafe at Monterey Bay Aquarium, and so on. Again, we will do them in public spaces if they
A Champion of the Chefs' Culture
Before becoming Director of Culinary Support and Development, Mark Zammit worked for many years as a GM and then DM for Bon Appétit, dealing with some of its largest accounts. When he accepted his new role two years ago, “Fedele was very clear the company did not need a corporate executive chef,” he says. “Our success is the result of strong individual chefs and general managers. My job is to keep them focused on the standards we expect them to meet with food programs they develop.” To do that without an emphasis on corporate manuals or menus, he says the company instead emphasizes “Standards and expectations that describe what we mean when we say ‘real food,’ or ‘quality food.’”
Some examples: Bon Appétit’s standards declare that all sauces and soup stocks will be made from scratch.That regional and seasonal products will be the ingredient choice when available.That vegetarian options will be offered at all meals.That all turkey and beef deli meat will be roasted on site.
These and other standards also key neatly into what Bon Appétit calls its “Great Expectations” program,“an effort focused on those café stations that tend to be more ‘institutional’ because of their nature—the grill, the salad bar, the deli,” says Zammit.“We wanted to make sure they would never be taken for granted.” Chef-developed, it lists expectations to help ensure that such stations receive continuing attention.
Although the company does not roll out programs across its account base, “we do give chefs the resources to put together their own,” says Zammit. He cites the company’s Mundo Latino program, a workshop created by Bon Appétit chefs with particular expertise in Latin cuisine to explore the authentic flavor profiles of food from Central and South America.
“We dissected classic recipes as a way of exploring the pantries used by these countries and how those ingredients could be put to use in our cafes,” Zammit explains. “Chefs from our regional exchanges came here to participate.Then we made a chef available to them in each region to help run regional workshops on the same material and to disseminate this expertise.”
One of Zammit’s current projects is to help develop relationships with local organic growers as a source of specialty items.“Organics are something we will have to look at as an industry in a serious way,” he believes.“It is not so much a flavor issue as a social responsibility issue.”
In fact, Bon Appétit kicked off an all-organic food program this past September, developed at the request of Evergreen College in Washington.“It is giving us a model to explore the real cost of relying upon organic food supplies, and to explore the kinds of purchasing and other systems you need to make such a program run smoothly.”
Zammit also chairs a group of chefs known as the“Kitchen Cabinet.” Selected annually by BA’s regional VPs , these chefs meet periodically and act as an advisory board to Fedele and the Culinary department on matters such as food standards and operations.“It had long been a dream of Fedele’s to have a board like this,” says Zammit.“He wanted to be able to talk to chefs directly, without the filter of management between them.”
Issues raised by the group become the basis for followup projects. One recent effort “was to help our people prepare for times when the economy might worsen,” says Zammit.“Chefs are very aware of what can happen to food and quality when changes in traffic and demand occur in the café.They wanted a program to help them deal with such issues and we are working to develop one.”