“Don’t even start,” he warns, because once equivalencies are in place, it becomes nearly impossible to reverse the damage.
Anonymous, General Manager, Dining Services
In my 35 years of strategic planning and food service consulting experience in higher education dining, I’ve seen just about every model and supposed “innovation” in meal plans. One of the most misused and misunderstood mechanisms of all is the implementation of meal equivalences.
While it may have begun as a practical convenience, allowing students to use a meal swipe for a retail combo meal instead of dining in an all-you-care-to-eat (AYCTE) facility, the evolution of this concept has veered into troubling territory. Today, the widespread promotion and reliance on meal equivalencies is no longer a student benefit.
In fact, it has become an insidious incentive, one that is often framed as providing more convenience and value to students; meanwhile, food service operators benefit financially for discouraging students from using the AYCTE dining halls and downgrading the overall value of their meal plan.
And colleges and universities are often complicit, whether by oversight, contract design, or a lack of transparent data analysis.
Let’s break it down.
What Is a Meal Equivalency?
A meal equivalency allows a student to convert a traditional dining swipe into an alternative food transaction outside of the dining hall, usually at participating retail locations across campus. But there’s more than one type of equivalency, and both forms have the same result: less value for the student, more margin for the operator.
Two Faces of Meal Equivalency: Dollar-Based vs. Pre-Determined Combos
Meal equivalencies generally take one of two forms:
- Dollar-Based Equivalency – The student is given a fixed dollar amount (typically between $6.50 and $9.00) to spend at designated retail locations. If their selected items exceed that value, they pay the difference out-of-pocket, often using declining balance or personal funds. If they spend less, the remaining value is forfeited. Either way, the student rarely captures the full value of what they paid for when purchasing the meal plan.
- Pre-Determined Combo Equivalency – Sometimes presented as a “Pick 3” or “Pick 4” meal (e.g., entrée + side + beverage + dessert), this structure offers a limited set of bundled options. While it may appear more generous than a dollar cap, the selections are often tightly controlled by the operator: limited variety, prepackaged items, and restricted availability during off-peak periods. Nutritional quality and freshness may also suffer.
In both models, the student is systematically steered away from the full value and experience of the AYCTE dining hall, which is where community-building, customization, and variety and value thrive.
The Financial Shell Game
Here’s the basic structure most universities don’t see, or choose not to scrutinize closely:
- An AYCTE dining hall meal could cost the operator approximately $10.50–$14.00 per meal to produce (inclusive of food, labor, utilities, etc.).
- That same student, using a swipe as an equivalency at a branded or in-house retail location, receives a capped value of around $7.00–$8.50.
- The operator pockets the difference.
Multiply this practice across thousands of daily transactions and hundreds of thousands of equivalency swipes over a semester, and you begin to see the benefit of it, from the operator’s point of view:
Equivalency masked as value.
They require fewer staff, less labor, lower food cost and faster throughput, all appealing from the surface. Leading the university and students alike to believe they are getting increased value; however, after experiencing how quickly their declining balance runs dry and how limited their options truly are, students start to realize they are receiving less value and will often try to opt out of the meal plan, leaving administrators confused and frustrated.
The Hidden Rebate Windfall
This rebate structure provides yet another layer of financial gain for operators, and it’s often hidden in the food cost math.
On average, the cost of goods sold (COGS) is higher in retail food locations, coffee shops, and convenience stores where meal equivalencies are accepted. Individually packaged items, bottled beverages, and name-brand grab-and-go meals cost more than the batch-prepared, scratch-cooked meals served in AYCTE dining halls. Yet operators often promote these higher-COGS venues for equivalency usage.
Why? Because total purchasing volume through broadline distributors and food manufacturers increases, it triggers larger rebate checks on the back end.
Operators receive financial rebates and incentives from their supply chain partners based on the total dollar amount of food purchased, not just the volume. So, while COGS may rise in retail, the operator benefits from:
- Higher per-transaction revenue,
- Lower labor costs, and
- Increased rebates based on total dollars spent.
In short:
The higher the retail food cost, the bigger the rebate payout to the operator.
Meanwhile, the AYCTE dining program, with its potential for efficiency, scale, and community impact, gets hollowed out, because it doesn’t offer the same rebate-rich environment.
The Insidious Sabotage of Residential Dining
What begins as a seemingly harmless convenience, letting students use meal equivalencies to grab a burger or salad outside the dining hall, can quickly turn into something far more insidious.
We’ve seen it time and again: operators subtly and strategically limit the hours, menus, or availability of popular items in the AYCTE dining halls, while pushing those same items to retail venues tied to equivalency swipes.
The result? Students are quietly funneled into using their swipes in retail, not because it’s more convenient, but because it’s the only place they can get the food they actually want, when they actually want it. Some common examples include:
- Chicken tenders, quesadillas, or smoothies? They’re available, but only at the retail grill, where the equivalency cap ensures you’re getting less value than you paid for.
- Extended hours in retail: The dining hall is closed, but the branded concept across campus is open until 11 PM, conveniently ready to absorb your equivalency.
This creates a system where students are encouraged to extract less value from their plan in exchange for perceived convenience.
This strategy detracts from the overall value of the residential dining program. It can reduce perceived value, lower student satisfaction, and weaken the communal dining experience, and over time diminishes the very purpose of a centralized residential dining model at risk.
Who Really Loses?
Let’s be clear: Students lose. Parents lose. Universities lose.
Students are led to believe they’re gaining flexibility and convenience through meal equivalencies, but the reality is far more costly.
Yes, students may still get the food they want. Still, it’s delivered through a restricted system: limited combo meals, capped values, and often only available during narrow operating windows. Worse, if their cravings exceed the equivalency cap, and they usually do, they’re forced to spend additional declining balance dollars or out-of-pocket cash just to make up the difference; all in addition to what they are paying for the cost of a meal plan.
Eventually, many students do the math. They realize that the food they want isn’t accessible without paying extra, the dining hall experience feels subpar or inconvenient, and their supposed flexibility comes with too many strings attached. The result? They disengage from the on-campus program altogether and look off-campus to meet their food and housing needs, a choice that drains dining and housing participation, undermines the institution’s investment in its program, and weakens the campus community at its core.
Parents, especially those footing the bill, become disillusioned. They question why they’re paying for a plan that underdelivers. They also wonder why they need to add money to a meal plan or contribute more money to purchase food, beyond the plan’s cost, and they complain, rightfully so.
Universities lose the social cohesion that dining programs are meant to cultivate. Dining halls are one of the most powerful tools to build community, foster friendships, and support emotional well-being, especially in the first 6 weeks of the semester, the most critical window for student retention. When those dining halls are empty and students eat alone from retail bags, the institution’s investment in student life is squandered.
The Contractual Blind Spot
Many dining contracts fail to track or report equivalency usage with precision. They don’t require disaggregated data. They don’t measure cost/value trade-offs. And in some cases, they inadvertently reward the operator for high equivalency volume because it reduces their cost of goods sold and improves profitability.
This is a textbook insidious incentive, one that shifts control away from student-centered service and toward operator-centered financial engineering.
How We Fix It
If you’re a university leader, VP of Finance, Director of Auxiliaries, or business officer, it’s time to stop treating meal equivalencies as the solution and start interrogating the system.
Six steps to realign incentives with student outcomes:
- Eliminate or Cap Equivalency Usage: Limit to 1–2 per week unless justified by student need or ADA compliance.
- Ensure Value Parity: If a student pays $13 per meal, the equivalency should reflect $13 in usable value, not $7.50.
- Demand Transparency: Require weekly reporting from the operating team: equivalency usage, average transaction value, dining hall participation, and student satisfaction.
- Monitor Menu Engineering: Audit menus and hours to ensure operators aren’t limiting popular items in the AYCTE dining hall to drive equivalency usage.
- Restructure Contracts: Eliminate clauses that reward operators for increased retail throughput or reduced dining hall participation.
- Re-center Dining Halls: Promote Anytime Dining venues as hubs of connection, wellness, and community, not just buffet lines.
Final Thoughts
Meal equivalencies, when used sparingly and responsibly, offer flexibility. But when operators are financially incentivized to divert students from the heart of your dining program, and students are led into accepting less value for more money, you don’t have a dining strategy. You have a value extraction scheme.
The real goal isn’t feeding students cheaply; it’s fostering human connection and helping them connect and belong.
And students don’t form lasting friendships over retail bags and takeout containers.
They form them in dining halls when the experience is worthy of their time, trust, and tuition.
If you want to fix your retention, grow enrollment, and rebuild student satisfaction, start by removing the insidious incentives that quietly erode your campus dining program from within.
