DeKALB — As the price of food and groceries reaches record highs across the country, NIU’s campus food services are beginning to feel the effects of a historic shock wave of inflation. Students began to feel the impact of rising grocery prices, and now dining halls are swimming in choppy waters.
Since July 2021, the price of food in grocery stores in the United States has increased by 13.1% and the price of food in restaurants has increased by 7.6%, according to a report of the United States Department of Agriculture. The USDA predicts that food prices will generally increase by about 3% by next year.
As the US food market becomes increasingly volatile, NIU must swim through the waves of inflation with little to do or change.
How NIU feeds its students
NIU is under an exclusive contract to buy its food in bulk from Gordon Food Service, and even in the wake of massive food inflation, NIU is unable to negotiate food prices.
Daniel Koenen, executive director of on-campus food services and hospitality instructor at NIU, said prices for some food items have increased by “hundreds of percentages” during the COVID-19 pandemic, and from 2019 to 2022, GFS feed prices have increased by approximately 32%. . Under NIU’s contract with GFS, the university receives discounts on food items purchased in bulk from the supplier.
Koenen said an issue arguably bigger than the price hikes was supply chain issues for NIU’s catering services.
“Our agreement with GFS is that they will send us a ‘like product’ if they no longer match the item we ordered,” Koenen said.
This put pressure on NIU canteens, as they can order a specific product, only to be sent a “similar product” which could cost considerably more than usual.
PepsiCo is another major food and beverage partner with NIU; the school’s 10-year contract with them also caused damage to restaurants on campus due to price changes and supply issues.
“We saw (with the new contract) a price increase of 43%,” Koenen said.
NIU’s main incentive for contracting with PepsiCo is sponsorship dollars, which go to scholarships and on-campus advertising.
The struggle to keep prices stable
Koenen explained that NIU does its best not to pass these price increases on to diners, but there are some corners that need to be cut.
“We do our best not to increase prices significantly, but when we have an increase – a significant increase in prices – we have to adjust,” Koenen said.
While NIU must bear the brunt of food inflation, only time can remedy the situation. Carl Campbell III, professor and head of the economics department, said inflation is often caused by external factors over which the country has little or no control, such as the war in Ukraine which causes shortages of grain and crude oil.
With these external factors, the federal government can only fight inflation with temporary solutions. Raising interest rates can reduce demand for food and foodservice, Campbell said, but this tactic is a slippery slope.
“If inflation gets out of hand, it can be extremely disruptive,” Campbell said. “Most economists think that having inflation around two or three percent a year is probably a good thing. Obviously, if it gets higher than that, then it can start having more harmful effects.