Issue 262: February 2009


 Three Blind Mice

In the first edition (1989) of From Land to Mouth: Understanding the Food System, Brewster wrote that six corporations in a sector seemed to be the lowest number for a ‘sustainable oligopoly’. That number now seems to have dropped to three (though some sectors still entertain more than that), for example: Kraft-Saputo-Parmalat (dairy), Cargill-ADM-Bunge (grain), Nestlé-PepsiCo-Kraft (food & beverage), Monsanto-DuPont-Syngenta (seeds), (Hewlitt-Packard-IBM-Microsoft (computing), Aramark-Compass-Sodexo (food service). . . 
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Industrial feeding

Edited and adapted from the thesis research of Sarah Martin, Institute of Interdisciplinary Studies, Carleton University

3 blind miceToday the institutional food service sector is overwhelmingly dominated by three transnational corporations: Aramark, headquartered in Philadelphia, Compass, in London and Sodexho, in Paris. All three corporations have undergone massive growth since the Second World War due to industry consolidation and public agencies, including hospitals and schools, contracting out their food services. The sales for the sector are estimated to be over US$234 billion annually worldwide.

Institutional foodservices are located primarily in workplaces and educational and healthcare facilities. The Canadian institutional foodservice market makes up just over 2% of the total global market with $5.2 billion in sales. It fills 32.7% of the total foodservice market in Canada, higher than fast food at 23.3% but lower than cafes and restaurants at 42.9%. However, its growth rate has far outstripped all other foodservice areas, and this trend is expected to continue, especially  with universities and colleges; in 2006 the educational sector generated 40% of institutional food’s total value, and the healthcare sector followed with 28%.

Institutional foodservice really got underway during the Second World War, when “proper feeding stations” were installed in factories to counter the war-time loss of labour, resulting in increased production, fewer accidents and mistakes and a claim of up to 300% savings in production costs. The government provided “industrial feeding specialists” to assist companies in improving food facilities, especially targeting larger plants, such as shipyards and aircraft plants (with a Boeing plant reporting simultaneous feeding of 30,000 employees). It was also a new avenue for moving unexpected agricultural surpluses, and surplus that had been previously sent to relief agencies was now shifted to the industrial sector.

In 1941, Canada created the Nutrition Service as part of the Department of Pensions and National Health. The first function of the service was to “study the food facilities in defence industries from a nutritional viewpoint, and to suggest improvements where possible.” Thus a precedent was set for government involvement in  population nutrition.

. . .  See How They Run  . . .

The two founders of Aramark met in a Second World War aircraft plant because they both had contracts to supply peanut vending machines to Douglas Aircraft. Dave Davidson and Bill Fishman of the Automatic Merchandising Company, both signed contracts to supply Douglas Aircraft plants in Santa Monica and Chicago during the Second World War. Davidson was moving his machines from retail outlets to factories and offices in Chicago, and Fishman was attempting to transform his vending operation into a food service operation. The two owners individually tried throughout the 1950s to expand into food services but were unsuccessful. However, they merged the two companies in 1959 into the Automatic Retailers of America, (ARA), and from this position were able to consolidate their holdings and buy more than 150 vending companies between 1959 and 1964. The expansion included the purchase of Slater Systems, a “manual” (as opposed to automatic) foodservice operator; they then bought a company that specialized in institutional markets such as college and university cafeterias.

ARA continued moving into new service areas including nursing homes and magazine distribution companies. By 1964 they were operating over 750 manual food operations and began an aggressive expansion into airline catering, periodical sales, resort management and laundry services among others. Despite several run-ins with the  Federal Trade Commission (FTC) for market monopoly and price-fixing, ARA continued to expand by buying up smaller service companies, for example, laundry, trucking and daycare, along with new services like airline catering. During the late 1970s the company began to expand into Europe and Canada and became the largest food services company in the Canada with the purchase of VS Services. New management in the 1980s in the 1990s changed ARA’s name to Aramark and the food services division, in particular began to prosper.

As in Canada, the British government legislated industrial feeding facilities and programs during the Second World War. In 1967, Factory Canteens was bought by Grand Metropolitan, a food and spirits company, and spun it off into Compass Group in 1987. Compass began with the goal to become the world’s largest foodservice corporation which began with the acquisition of railway caterers, airline catering and Canteen Corp, the third largest vending and foodservice company in the US in the early 1990s. By purchasing Eurest Compass in 1995, Compass met its goal and became the largest food service organization in the world.

Farmer's WifeAt this point all three corporations continued aggressive expansions and bought up smaller dining services. For example, Compass was able to gain large contracts like IBM and secure advantageous terms from suppliers. Sodexho moved into prison management in the US, bought the largest British catering firm, and in 1998 bought the foodservice arm of Marriott. Along with the entire institutional foodservice sector Compass has experienced “record expansion” including new sites in Africa, and purchasing Brazil’s largest caterer. In Canada, as market leader it is forecast to have sales of $1.1billion. In addition to its position as the world’s largest foodservice corporation, Compass is now the seventh largest employer in the world.

Sodexho (now Sodexo), for its part, promotes itself as an important player in the fight against hunger, and was one of the  corporate sponsors of the US Community Food Security Coalition’s conference last fall.



#262: February 2009 TOC
Three Blind Mice:: Sarah Martin explores the three giants in the institutional foodservice business
Cheese [made from milk] Please: The Big Three cheesemakers object to a ruling that cheese must be made mostly out of real milk
    New CWB executive changes tack: government-appointed CEO now admits that the CWB plays an important role for farmers
    Profits - but not for the farmers: Viterra posts a record profit as a private corporation
    And more agrifuels subsidies
DNA Testing for Adulteration: UK researchers can now identify pure Basmati rice
Not a Straight Line: UK author says development is complex
Sohpisticated Science: Kenyan organization researches pest and vector management for pest control
Plant breeding in China: Scientists use non-invasive genetic technologies
The Taro Story (cont.): Hawaiian legislators are trying to protect the crop which is sacred to Native Hawaiians
Crop destruction in Gaza: Economic and military siege of Gaza has contaminated and destroyed land and water sources
Cooking the GMO Books: Friends of the Earth unmask the industry front group, ISAAA
A More Reliable Source: IFOAM reports an increase in organic food production
rBGH failing: New England dairy industry rejects the growth hormone