Compass inks 10-year foodservice deal with Boeing

Nation's Restaurant News,  May 27, 2002  by Paul King

Tags: Boeing Co.

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SEATTLE - Aramark, concerned that its foodservice contract with The Boeing Co. was no longer "financially viable" given continuing employee furloughs, dropped its business with Boeing's Seattle-area facilities, allowing Compass Group North America to snap it up.

Boeing awarded Compass a 10-year deal to manage nearly 50 foodservice operations in greater Seattle, Portland, Ore., and Wichita, Kan. Kurt Kimball, vice president of new business development for Compass, said the deal would be worth about $40 million a year.

Compass' Eurest and Canteen divisions, along with minority partner Thompson Hospitality, will provide manual and vended foodservice. In addition, Compass' existing contract with a Boeing plant in El Segundo, Calif., was extended.

The foodservice operations became available after Aramark approached Boeing about modifying the contract it held with the airplane manufacturer, Aramark officials said in a statement. Aramark, which has been Boeing's primary foodservice provider across the country for 50 years, was concerned that its deal would not be profitable once Boeing finishes a series of layoffs designed to cut the company's employee base by as many as 35,000.

Because of declines in orders from commercial airlines for jets, Boeing has had to lay off nearly 20,000 employees, 11,800 of them in the Seattle area, Boeing officials said. Airlines cut their orders for jet aircraft because of the precipitous drop in air traffic after Sept. 11. Boeing officials project that air travel will get back to normal by August, but that won't translate into more business for the manufacturer until several months after that.

Aramark negotiated a new 10-year deal that allows it to continue managing Boeing facilities in Southern California; St. Louis; Chicago; Philadelphia; and Mesa, Ariz.

"We anticipate a smooth transition to the Compass Group companies that will be transparent to Boeing employees," said Bud Dennison, employee programs director for Boeing. Dennison added that the transition would be complete by July.

Kimball noted that Compass previously had been interested in the Boeing business.

"A couple of years ago the business went out to bid," he explained. "Aramark put an offer on the table that was significant. We were asked to match the offer, and we elected not to do that."

Kimball added that Compass executives are not worried about the recent spate of furloughs.

"Even though there have been reductions in staff - and there probably will be another reduction later in the year - there are still more than 60,000 people in the Puget Sound area, which is 60 percent to 70 percent of Boeing's total population," he said. "That's still a lot of customers."

Compass will focus on building participation through a combination of manual foodservice and vending services. Kimball noted that its strong vending business, with concepts such as Market Central and its branded partnerships with companies like Sonic and Blimpie, will allow it to offer high-quality foodservice that is not labor-intensive.

"We expect that $8 million to $10 million in volume of the total contract will be from vending," he said.

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