Sodexho Adds Texas Venues To Its Contract

Sodexho increased its gross potential by about $50 million over the next decade with the addition of the 17,844-seat Erwin Center and the Performing Arts Center to its food service contract at the University of Texas in Austin.

Jim Baker, university assistant athletic director, estimated the new contract, over its 10-year life, will result in a gross of $70 million-$80 million in food, drink and merchandise sales. Sodexho had had a limited contract at the university, providing food service for its athletic program facilities, but not the arena, for the last seven years, a deal that Baker valued in the $15 million range.

Sodexho was one of five companies bidding for the Austin food contract, which was announced July 9. Baker said it came down to the best financial deal and it was close. He declined to reveal the percentages bid in the straight P&L proposal, saying it will be another two months before the contract is signed. It also involves an investment on Sodexho's part, tied to improvements planned throughout the facilities.

Other companies submitting bids included Boston Concessions, Aramark, Fine Host and Gladieux, Baker said.

The contract includes concessions at the Darrel K Royal Memorial Stadium, Dish Falk Field, McCombs Field, Erwin Center and the Performing Arts Center.

Erwin Center's concessions contract had been a management fee deal with Ray LeMay's American Concessions since 1982, said John Graham, manager of the arena. That deal expired and was bid out by the Athletic Department under a restructuring that put the arena under that department a year ago.

"They bought the equipment we had," Graham said of Sodexho's deal. He expects the gross to increase dramatically in part because of planned expansion. Under a three-year construction plan, Erwin Center would build luxury suites and new concessions stands beginning in April 2002. The suites would go where the current concession stands and restrooms are and the latter would be moved to the perimeter, he explained.

Planned renovations could cost up to $43 million overall, but that figure depends on funding, Graham said. Erwin Center is 24 years old.

Graham said the arena's food and drink gross varies widely, from $2.5 million to $4 million annually, depending on its concert schedule. "Catering is another big factor," he said. "We do a lot of corporate events."

Baker estimated about $30 million of the gross potential over the next decade is from athletics, particularly football. Another $2 million is from the Performing Arts Center, which Sodexho took over last year and has now added in its new contract. The rest would be from Erwin Center, 66% of which would be concessions and 34% catering.

Sodexho will be handling merchandise for concerts, which is a big variable, accounting for $10 million-$20 million of the projected gross. "We'd be talking $60 million without merchandise," Baker said.

Improvements are planned for the football stadium as well. "We're looking at more grills and more electric so we can expand the menus more," Baker said.

Brent Jones, general manager for Sodexho at UT, cited the student enrollment of more than 50,000 as a great market.

Sodexho, a wholly-owned subsidiary of Sodexho Alliance, has $4.7 billion in annual sales companywide and is headquartered in Gaithersburg, Md.