ARAMARK Corporation (NYSE: RMK) is a multinational corporation involved in the business of providing institutional services, including food and uniform service, to clients including hospitals, schools, businesses, and sports facilities. The company is based in Philadelphia.

The company was founded in 1959 by Davre Davidson and William Fishman as Automatic Retailers of America, whose business was in vending machines. ARA bought Philadelphia's Slater Systems, Inc., in 1961.

ARA's first international operation was the catering of the 1968 Summer Olympics in Mexico City. The next year, Automatic Retailers of America became ARA Services. In 1977, ARA entered the uniform business.

ARA changed its name to Aramark in 1994.

Aramark is also the operator of several lodges in the vicinity of the United States national parks, including four properties near Denali National Park in Alaska.

Legal Issues

Since Aramark's 2003 takeover of the environmental services at Scott & White Hospital in Temple, Texas, the company has been under fire for alleged malfeasance, breach of contract, incompetence and rampant workplace bullying. While the hospital's board members have profusely praised the company, most other staff members have been extremely critical of Aramark's managers, of its treatment of its employees and of the quality of the services provided. Aramark agreed to hire Scott & White's environmental services staffs en masse and to allow them to keep both their current pay levels and their years of seniority. After hiring them, Aramark began to systematically dismiss the long-term workers, replacing them with new employees at much lower wage levels. Several former Scott & White employees have successfully sued the company, while others have settled out of court. Allegations against the company have included false documentation and defamation of character. Scott & White, a major medical center with satellite clinics throughout central Texas, is one of Aramark's largest customers.

Drayton McLane, Jr., the owner of the Houston Astros, is a member of Scott & White's Board of Trustees and a major stockholder in Aramark. This has led some Scott & White staff members to accuse McLane of violating conflict of interest laws.

Aramark has also been taken to task for a December 1999 incident in which a vendor at Giant Stadium kept selling beer to a man who was clearly drunk. Later, the drunk driver caused a traffic acident in which a 2-year-old child was paralyzed from the neck down. The family sued Aramark, claiming that the service company shared responsibility with the driver. Though the stadium has a limit to how much beer a customer can buy, the driver got around it by bribing a vendor. Though Aramark kept the case in court for over six years, the child's family eventualy won.[1]

In January of 2004, Aramark agreed to pay more than $29,000 in gratuities to employees of the Southbridge Conference Center in Boston, Massachusetts after several employees filed complaints that the company was withholding their tips. According to the complaints, the tips were withheld from January of 2002 to August of 2003. (Boston Globe, Jan. 28, 2004.)

In 2005, several Aramark managers were implicated in an embezzlement scandal involving underreporting of the company's vending machine revenues.

Criticism

Part of Aramark's business involves prison catering and prison shops. The group "Campaign Against Prison Slavery" alleges that while serving this "captive market," Aramark billed Ohio's prisons as if had served 4,462,649 meals instead of the 2,803,722 meals actually served. The difference could represent an over-billing of some $2.08 million. Aramark subsequently lost the contract in 2000 when State employees put in a bid that was one million dollars lower than the company's bid.[2]

In addition to prisons, Aramark supplies catering services to many universities and colleges across North America. In this capacity they have been criticized for entering into secret, exclusive contacts with administrations without the consult or input of student organizations. Many schools have adopted mandatory Aramark "meal plan" requirements for living in on-campus residence halls, including the University of Alberta's Lister Center Residence. Aramark school contracts are typically restrictive to the point where they require that the university use the company's services to provide all food on campus. Students have been required to ask Aramark for permission before baking their own snacks for social events, and barred from buying food items at grocery stores for use at student meetings because of university contractual obligations with Aramark.[3][4]

Although in the past it was fairly common for college dining to be handled in-house, or by smaller companies serving small geographic markets, the university food services industry could today be described as an oligopoly, increasingly dominated by just three giants: Aramark, Sodexho, and Compass Group. Former food service business owner T.J. MacDermott described the situation

"I would say that 90 percent of all contractors at colleges use the Big Three, [and] it's intensifying. It's reached a point now that when contracts are negotiated they'll offer a no-strings attachment, which includes a $50,000 to $150,000 cash payment that goes to the college's treasury. It's as good as being a star second baseman. We think that it's money for nothing. There's no repayment requirement. It's like a gift. The financial competition among the Big Three essentially freezes out the smaller independents."[5]