The next time someone you know raves about “a great little bagel joint” they just visited, consider this: such word of mouth advertising can work just as well to build onsite transactions as it does for streetside businesses.

That's if your operation has a venue with at least some access to off-campus or streetside traffic, where “you never know who you're dealing with on a daily basis,” says Troy Nelson, GM of Foodservice Operations for Aramark Business Dining at the Dallas headquarters of a global telecommunications company. There, Aramark operates three outlets: an employee dining facility, a smoothie and juice bar and a licensed Einstein Bros. Bagel store with public access.

“Our primary customer is first and foremost the employees within the building,” says Nelson. “Our secondary target is the public population within the immediate area.” At Einstein's, he says the goal is for customers to have the kind of positive experience that will encourage them to tell two or three friends about the operation, essentially creating a grassroots marketing campaign.

While such objectives aren't new to onsite operations, today's more sophisticated branding and interest in finding incremental sales and intercept marketing opportunities are leading a surprising variety of operators to expand their customer bases in this way.

Coffee shops, convenience stores and many other onsite service points have potential in this area. Even some in-house cafeterias can sometimes reach out to non-traditional customers, as Kettering Medical Center Director of Nutrition Services Cheryl Shimmins discovered when she introduced the hospital's “Years Ahead” program for seniors.

“Individuals who participate present a ‘Years Ahead’ card and get a 20 percent discount,” she says (employees get a 25 percent discount and ‘double-dipping’ is not allowed). While Shimmins admits the number of customers the program brings in is modest, “it is a real customer pleaser for those who take advantage of it. They tend to be regulars and also are great marketing representatives for the hospital to the outside world.”

Similar senior dining programs exist at many other healthcare facilities, including the Santa Monica branch of UCLA Medical Center and Lumberton, North Carolina's Southeastern Regional Medical Center.

Location, Location, Location

Obviously, having the right kind of location is critical to making such initiatives more than just modest PR-enhancing sidelines. At Brigham Young University, four different campus outlets attract off-campus traffic. The largest of these is BYU's Creamery on 9th (a combination convenience market and ice cream shop/grill) which rings up over $4.5 million a year in sales.

Almost 26 percent of the store's traffic is from off campus, according to BYU's director of dining, Dean Wright, making it a significant source of income for the program. He cites multiple factors: the location right on a main thoroughfare on the edge of campus; the fact that the area has lots of seniors, but no large grocery store; and the store's product mix, which appeals both to casual diners (ice cream and grill items) and to grocery shoppers (fresh meat, produce, a wide selection of grocery items and other staples).

Dealing with UBIT

Wright's other operations that appeal to the public include a new “outlet store” where BYU sells over-run baked goods and other production from its central production facility, its Legends Grill and its takeout catering business, BYU Food to Go.

On the business side, Wright cautions other operators who wish to develop such opportunities to make sure they follow appropriate accounting procedures for recognizing income that may be subject to “unrelated business income tax” (UBIT). At BYU, each location performs month-long polls each October and April, asking every customer about the nature of their purchases. The data is logged directly on the POS system and used by the school's accountants to establish the percentage of sales subject to the UBIT tax.

Wright also notes that despite the dining department's success managing UBIT, it does not promote its facilities outside the campus.

Understanding Traffic Patterns

There's no doubt that colleges and universities in urban locations are more likely to have opportunities along these lines because of the number of satellite points of service they typically support. Still, taking advantage of an opportunity requires careful analysis of customer and traffic pattern potential.

At the Yale University campus in New Haven, CT, the Durfee's convenience store faces Elm Street, a public thoroughfare, and is right on the local bus line. It is also just a few blocks from the city post office, library, courthouse and other municipal buildings.

Directly across the street, Yale also operates its Thain Café, a coffee/bakery shop in the basement of another campus building. Thain features a product mix focused on sustainable and natural products that appeals to the student customer base.

“We ran some focus groups and found that many of the city workers had set coffee breaks at about 10 a.m., but our operations were just opening their doors at that time and weren't ready to tap that potential business,” says Tom Tucker, Yale's director of retail development and operations. “We also found they wanted a greater variety of items, including some that weren't so sweet.”

In response, the department began opening both venues 30 minutes earlier and also added items that would appeal to this older customer base. Tucker says another change was to keep Durfee's open during the summer, when it had traditionally closed.

“Despite the fact that most of the student traffic disappears, it was inefficient to shut the store down,” he says. “It always meant eliminating all of the inventory for a few months and then re-stocking it.

“This past summer, we restructured our labor and overhead and kept it open. We also struck up a partnership with an ice cream vending company and installed a machine that makes ice cream in front of you. We put a sandwich board sign out in front of Durfees to promote that and picked up a significant amount of street business from that.

“Even small changes can help you bring in non-traditional revenue,” Tucker adds. “Every dollar you can attract that doesn't dilute your meal plan revenue is a plus.”

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