“Pretty, Pretty, Good” For Some in 2011

College tuition is soaring, student debt has quintupled since 2000, states are cutting funding to public universities, and federal aid for college students is potentially on the chopping block.  But how are the three food service companies (Aramark, Compass, and Sodexo) that dominate college dining doing?  As Larry David, creator of Curb Your Enthusiasm, might put it “pretty, pretty, good.”

According to recent financial filings, the Big 3 (Aramark, Compass, and Sodexo) earned $1.4 billion in operating profits* from their North American operations in fiscal 2011, a 12% increase from 2010.  These results include operating profits from the education (college and K-12), hospital, corporate, and other food service sectors.  All three companies (which do not break out the education segment data separately) pointed to revenue growth from their education segment.

North America Operating Profits ($millons)
  2010 2011 % Change
Aramark $351 $401 14.2%
Compass $752 $844 12.3%
Sodexo $378 $409 8.2%

In contrast, according to the Department of Labor, the total compensation for food service workers was up only 1.1% as of the third quarter of 2011, and inflation was up 3.4% in 2011 (through November).  This is not pretty, pretty good.  It’s pretty, pretty, bad.

* Operating profits do not include taxes, interest, and other non-operating costs.  Results for Sodexo (which reports results in Euros) and Compass (which reports results in British Pounds) have been converted into dollars as of the December 1, 2011 exchange rate.

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