What is best, a P&L or management fee agreement?

There is no correct answer, nor do we have a favorite. A P&L agreement is one where an operator bears the financial risk. They collect all revenues and expenses and often pay a percentage commission back to the college or university. While this structure minimizes risk to the institution, it also reduces your control over the dining program. If changes are requested such as extended hours or reduced pricing, this will cut into the operator’s budget, and they may not be willing to make the change. Conversely, a management fee agreement is one where the institution bears the financial risk. The operator is entrusted to manage all revenues and expenses on the college’s behalf, and most surplus or deficit is borne by the institution. The operator profits from a management fee, usually expressed as a fixed fee, percentage of revenues or percentage of cost. While there is more financial risk involved for the college, it also means you have complete control over your program. If you are willing to fund it, your operator can make it happen. Ultimately, this decision comes down to each institution’s risk tolerance.