ASUC Student Union loses $500K annual lease with food service company Chartwells

Zahira Chaudhry/Staff
Sariwa is a new La Cocina pop-up located in Martin Luther King Jr. Student Union, replacing the space in March previously vacated by food service company Chartwells.

Related Posts

Less than three years after Lower Sproul Plaza reopened in fall 2015, Chartwells, the company contracted to provide the plaza with food and drink businesses, backed out of its 10-year lease.

The ASUC and ASUC Student Union imagined the new Lower Sproul Plaza as a hub of student life — with study spaces, burgers, coffee shops and even a bar all in one place — and food service company Chartwells was to provide much of those services, paying $500,000 in rent annually.

But around June 2017, Chartwells closed about half the businesses it operated in Lower Sproul Plaza, and by the end of this May, all of the other businesses will shut down, too.

The volume of traffic in the locations Chartwells rented for its businesses was far lower than anticipated, reaching only half of the original projections, according to a statement from UC Berkeley spokesperson Adam Ratliff. Conversations with Chartwells regarding termination of the contract had been ongoing since early 2017, before a agreement was reached mutually with the ASUC Student Union in the fall to cut a failing contract short years before it was intended to end.

Chartwells closed House of Pi, Asado, Root 150 and Equator Coffees & Teas in Eshleman Hall around June 2017, though it agreed to continue running the Martin Luther King Jr. building’s Equator, Bear’s Lair, True Blue and catering services until May 2018.

In its May 2017 campus budget recommendations, a UC Berkeley Academic Senate committee condemned what it described as the Lower Sproul-based facilities’ failure to meet original financial projections, the campus’s Division of Student Affairs’ inability to explain the underperformance, and the consequences of problems with the Chartwells lease.

“The manner in which the project has been run, and is being run, is simply distressing to the committee given our long-standing warnings to the administration,” the Committee on Academic Planning and Resource Allocation, or CAPRA, wrote in its recommendations.

Chartwells paid its lease through the 2017-18 year, but will cease payment for the subsequent year. Chartwells previously encountered bumps when criticism mounted over conditions for campus workers under private contractors. Chartwells did not respond to a request for comment.

Ratliff attributes the underperformance to the competitive dining market in the Bancroft Way area.

CAPRA chair Jennifer Johnson-Hanks said that based on quarterly financial statements the committee reviewed, the poor numbers were obvious.

“To what extent that’s poor management or decision-making, I don’t know,” Johnson-Hanks said. “For very good reasons, there’s been a hesitation to hire a large number of high-powered financial and managerial staff given the economic constraints of the university. But it’s hard to get reliable, good financial statements.”

The ASUC Student Union has been without a director of business and finance since Shanice Jackson left the position around May 2017.

The ASUC Student Union represents a collaboration in management between the ASUC and the campus. Money from the campus as well as student fees approved in 2010 jointly financed the $223 million renovation of Lower Sproul and more than $280 million in debt payments.

The Lower Sproul Fee Committee, which oversees the fee spending, allocates an amount each year to help cover the cost of the building’s operation, including custodial and maintenance work.

The rest of the revenue comes from commercial operations, such as the Amazon campus store, Cal Student Store and the rent Chartwells paid — of which a minimum of $250,000 was supposed to be allocated to the ASUC and the Graduate Assembly annually.

Aside from Chartwells, Ratliff said the retail services in the space are meeting or exceeding expectations in terms of revenue.

While Chartwells was in the process of moving out, the ASUC Student Union Board of Directors created a “Future of Food” committee to make recommendations about the use of the space. Right now, the committee is experimenting with three new “pop-up” restaurants every month in the vacated spaces — empty for months before the pop-ups and a new TeaOne in Eshleman filled them in February.

The new vendors — such as the currently featured La Cocina — serve as a test run for the future of the space to see which businesses drive the most traffic in the long run, according to ASUC Student Union Board of Directors chair Courtney Brousseau.

Beyond the pop-ups, the ASUC and Chartwells have agreed to a limited trial program this semester to allow students to use certain meal points, called “Paw Points,” at True Blue and Equator. This semester, students with residential meal plans have been provided with $50 worth of Paw Points.

“When people send their money at the Student Union, it goes directly back to student programs,” Brousseau said.

Contact Suhauna Hussain at [email protected]