Copyright 2014 Crain Communication
All Rights Reserved
Crain's Chicago Business
Deluxe sports food is not the competitive edge it used to be for Levy Restaurants.
Fare like the black bean veggie burger at the Staples Center in Los Angeles and the low-country shrimp and grits at the Georgia Dome in Atlanta helped Levy build a portfolio of clients that stands at 45 of all 113 major U.S. sports venues, more than any other food-service company. But rivals, namely Philadelphia's Aramark Sports and Entertainment Services LLC and Delaware North Cos. Sportservice of Buffalo, New York, are pulling pages from Levy's high-end playbook, making restaurant-quality, locally themed dishes more common on stadium menus nationwide.
Even so, Levy has booked nearly a dozen major sports teams and venues over the past two years, including the Minnesota Timberwolves, the Portland Trailblazers and the Phoenix Coyotes. But other major deals have slipped away.
So Levy is running a new play, and it has little to do with the beef brisket sandwich at the United Center or the High Plains Bison burger at Wrigley Field.
"Food quality is still important, but it's not No. 1 anymore," says Jeff Wineman, executive vice president of new business development at Levy. "Now it's data, it's analytics."
Levy learned the hard way that sports clients value numbers-based insights into what fans want to eat and when. The Chicago Bears last year awarded a 10-year contract to Aramark over Levy and incumbent Sportservice, citing Aramark's datafocused approach to concession operations.
Levy's issue, says its chief innovations officer, Alison Weber, has been a failure to back its culinary creativity with information about how it will boost a client's bottom line.
"It's not just, 'Look at all these great solutions and the great things we can do.' It's (showing) fundamentally why the solutions are right for you and how we can predict what their result will be," she says.
Levy last year created an analytics and technology department, hiring a team of former consultants with data synthesis experience in the financial and consumer products fields. The goal: to serve up troves of figures that help clients find ways to get fans to spend more at games.
"We've become complete converts" to big data, says Levy CEO Andy Lansing, "and we're not doing it to placate those clients that are asking to do it; we're doing it because it's really good business and it makes us so much better on the innovator and operator side."
Working with current clients, the analysts are looking for correlations between things like the stage and score of a game and fan food and beverage purchases.
"If we know that 85 percent of the time somebody who buys a beer also buys a salty snack, then we're going to promote combinations of beer and a salty snack to see if we can get them to add it on," says Jaime Faulkner, a former KPMG LLP consultant who audited concession contracts on the client side before Levy hired her in October to head its new group, which stands at 10 full-time data analysts and counting. "This is info they didn't have available to them before."
Levy's research on foodie trends in Portland, Oregon, was the foundation for Dr. Jack's, a 10,000-square-foot restaurant adjacent to the Trailblazers' arena that became an instant fan favorite and new revenue source for the team.
"A lot of what you'd see from a premium-level seat, they're bringing that same level of engagement to the concession environment," says Chris Oxley, the Trailblazers' general manager of arena operations. "That was a big factor for us."
Spurred by its growth in the sports and entertainment industry, annual revenue for Chicago-based Levy, a subsidiary of British food service giant Compass Group PLC, has risen 55 percent since 2009 to nearly $1.2 billion, according to an industry source.
ONLY SO MANY TEAMS
Most major sports concessions contracts offer teams a commission in the range of 40 to 50 percent of gross sales and pull in an average of about $20 in revenue per fan per game for food and beverage alone.
But there are only so many pro sports teams and facilities. Analytics help Levy wring more profit from existing contracts. But the company also is exploring another path to growth: college athletics and minor league baseball.
Levy last year added Wisconsin and Texas A&M as clients, as well as Ohio State University, where its reputation helped Levy unseat incumbent Sodexo Inc.
Despite not landing among the top five finalists based on its initial financial bid, Levy "had such a strong reputation on the premium food side that we had a couple folks on the (selection) committee champion them in based on that," said Xen Riggs, Ohio State's associate vice president for business development.
"The real area of growth in revenue for universities in general is the premium seating area," Mr. Riggs says. "Levy's model is particularly conducive to that."