The Price is Right… Right?

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How does this work?

The Foghorn spent two months collecting the prices of packaged products and grocery items, i.e. food not prepared or cooked fresh in USF’s on-campus kitchens. This included bottled drinks and items such as chips sold in three popular dining areas on campus: the Market Café (the caf), the Outtakes Café (the undercaf) and the Wolf & Kettle (the Lone Mountain caf).

Those prices were compared to those at Lucky Supermarket at the intersection of Fulton Street and Masonic Avenue, and Target at the intersection of Masonic and Geary Boulevard. These locations were chosen because they are the nearest options for off-campus shopping and where students are most likely to go for items if they do not have a meal plan.

In some cases, the same products sold on-campus were sold at these stores in different sizes. In those instances, the Foghorn compared the prices on a per-ounce or per-unit basis.

In practice

Sabra Hummus Cups are sold on Lone Mountain for $4.20 each. The same cups sell for $2.19 at Target and $2.99 at Lucky. In the Wolf and Kettle, that is a markup of 62.16% of the average price at the two stores.

The analysis found that the best value comes on bags of Doritos chips. A 3 ⅛ ounce bag of Doritos costs $1.89 at all three locations. The price is printed on the bag, so individual retailers cannot set their own price.

What does this mean?

While this analysis looked at packaged grocery-type items also sold off-campus, this gives an idea of how much value students lose when they are forced to purchase a meal plan. Taking into account the average markup of 54.43% on these items, a $2,410 Flexi meal plan will get you $1,560.57 in food at the other stores’ prices.

Why are these prices marked up?

“Markups are for one reason, and that is to generate cash flow,” said Fred Parrish, an author and business strategist who has appeared on CBS, NBC, Fox News and others. “There is no other reason to markup prices but to bring in more revenue.”

Micah Cavolo, Resident District Manager for Bon Appétit, who oversees USF eateries, said the markup is attributed to the added benefits paid to employees. Prices are typically set at the beginning of the year based on a “market basket” approach, which assesses prices at stores within two miles of campus. Cavolo added that Bon Appétit employees at USF are union members, earn a living wage, earn benefits, and receive a pension.

Not all foodservice workers on campus receive these benefits. According to Cavolo, workers who wear all-black come from temp agencies and do not receive the same benefits as Bon Appétit employees.

On-campus eateries do not list prices for many food items. A student typically does not know the exact amount they are paying until they get their receipt. Parrish cited constant and continuous growth in the higher education-related industries as another factor. Schools are constantly looking to improve facilities and retain faculty with competitive salaries, so every penny counts, he said.

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