In the past, the topic of food—its production, delivery, and consumption—has been a ho-hum issue for many Americans. Currently, the price of food is dramatically on the rise—especially the prices for staple grains. For more and more Americans, food prices are becoming a substantial financial burden. As households and grocery stores are affected by the tumbling market, ARAMARK, the company that supplies food to the Choate dining hall, could be hit hard by increasing food prices.
International markets have marked a recent increase in the net demand for grains, cereals, and corn. Simultaneous to this increase in demand has come a decrease in supply of these food crops.
The demand problems can be explained by the growth of the middle classes of developing countries in Asia and Latin America. The new citizens of the middle classes can now afford to purchase dairy and meat products, which require more grain to produce—to feed the animals—than most other food products. In other areas, corn and soy beans are in high demand as experimental motor fuels.
The second issue—the decrease in supply of certain food crops—can be attributed to climate change. Global warming and erratic rain patterns have decreased harvests worldwide, and so the yield of food crops has significantly diminished.
Because of the laws of supply and demand, food prices are at a record high. The price of corn has double in the past two years, and the price of wheat is now the highest it has been in 28 years.
Though it seems as though ARAMARK should be affected by the recent scarcity of food crops, it has avoided shortages thus far thanks to its size. Ms. Alicia Mysiorski, the Food Service Director at Choate, said, “As a major corporation, we are one of the first in line to receive products and services per our contracts and partnerships with super distributors like SYSCO.” Further, to obtain products in shortage and high demand, ARAMARK employees now attend food shows where they purchase sought after items in bulk and in advance.
Despite its size, ARAMARK cannot avoid increasing prices. However, they have a few solutions. ARAMARK will adjust its food budget only as a last resort—for now, the company will prioritize and adjust only certain aspects of the food it works with. Ms. Mysiorski says, “We will never switch to lower grades of meat, we will not change to generic brands of goods from current name brands that we carry. What we will do is perhaps make changes to produce for economic reasons due to supply and demand or seasonality.”
In addition to raised food prices, the increased price of fuel has an affect on ARAMARK. To transport food to Choate, ARAMARK, like other catering companies, must pay increasingly high delivery costs.
Some worry that as a result of the high prices of food and transportation, ARAMARK could raise the price of its contract with Choate, in turn triggering increased tuition costs. Ms. Mysiorski counters, “ARAMARK and Choate have a negotiated fee. We are not profit and loss. Choate absorbs the cost of everything that is purchased. There is no mark up on any of our goods or services provided.”
The advantage of Choate’s food being supplied by ARAMARK is that ARAMARK is a global corporation, and as such it has leverage with food distributors and can purchase food products at slightly lower prices than smaller companies. Despite all this, the price of food has risen and continues to rise. Whatever ARAMARK must pay for food, Choate absorbs. As a result, says Ms. Mysiorski, “There will be an increase to Choate’s costs as the price of food, fuel, etc. continues to rise.”
