Here's how the major conglomerates work...
Not a problem thinking that I was shorting the stock. Like I said, I'd actually like to see them make it, however, as an entrepreneur myself and having significant experience in the industry, there are just a lot of Red Flags.
OK, here's how the major conglomerates (Airmark, Chartwells, etc). Universities, Convention centers, end some shopping center will hire them to come in and run food. The contracts are structured in three ways: 1) Management fee 2) Percentage of Sales 3) Both. From my experience, most of the deals are done via a percentage basis. The Universities spent the millions to build out the food areas. Airmark comes in and gets free rent, utilities, etc. All they have to do is run it. Those deals are structured in a tier system where the University gets a higher percentage for certain things. For example, Their food card might get a lower percentage than a food court. Catering may by lower than the food card etc.
Typically I have seen the commissions paid at around 20-30%. So if Airmark generates $100,000 in sales, then $20,000 goes to the University. HENCE THE PROBLEM. If Aramark is going to give 20% straight to a University or other entity, then there isn't much room for bringing in another third party UNLESS that third party is willing to pay a higher percentage 35-40%. So if your yogurt concept comes in and does $100,000 per year in sales, then you will pay $40,000 for the right the right to be there. That is the way I have seen and experienced it working. Why do you think when you go to Dodgers Stadium, a hot dog costs $9. It's because everything is taken there cut. You have to raise your prices accordingly. Doing that in a University is not cool because many students are broke.
It again reminds me of the hard tactics they tried to sell me when I was looking into this. The salesman was like: "Think of the possibilities!!!" Universities, malls, hospitals, etc. When I started listing off how the University worked, he couldn't answer. The whole pitch was the old Benjamin Franklin... "Once an opportunity is realized it's lost" theory. The problem was that the leasing manager that I spoke to saw this as nothing more than a vending machine. They wouldn't give me location preference, hence, not to alienate their brick and motor business. I remember one mall telling me, "Look! We are a marketplace, not a vending machine house". The mall was willing provide me a location, however, it wasn't in an area that I thought would do well.
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