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Date: January 11, 1995

Location: Cranbury

Title: Aramark Swallows Harry M. Stevens Like a Slice of Personal Pizza

Author: Dan B. Levine

Subject: A large Philadelphia conglomerate has taken over America”s oldest concession firm

It was a marriage of giants–but a very quiet one. On Dec. 9, Aramark, a massive Philadelphia conglomerate that owns the country”s largest food service company, bought Harry M. Stevens of Cranbury, the oldest concession business in the U.S. The two private companies did not hold a major press conference, however, nor exchange tales of the legendary Harry Mozley Stevens, the company”s colorful founder. Aramark just issued a terse press release to mark the occasion.

As with most behind-closed-door deals, financial figures have not been released. It is likely, however, that Aramark, which has 14 divisions and sales of $5 billion, paid nearly $150 million for Stevens, which was valued at that figure last November in National Restaurant Business News. Aramark has inherited Stevens” 20 concession accounts at venues like Giants Stadium, Churchill Downs and the Houston Astrodome, to go along with the 100 in its leisure-services portfolio.

Both companies have had a decades-long relationship. “Over the past 25 years, Aramark has been in contact with Stevens,” says Charles Gillespie, president of Aramark”s leisure services group. Serious talks about the takeover, however, were only started in August. “Members of the Stevens family were the company”s fifth generation, and they were exploring their options,” says Gillespie. Agrees John Samerjan, director of public affairs for the New Jersey Sports and Exposition Authority in East Rutherford: “We had been hearing about the possible sale of Harry M. Stevens for a couple of months.”

Industry sources say the sale may have been driven by Stevens” recent financial troubles. According to insiders, Stevens” profits have fallen in the last three years, partly because the company has lost key accounts at Madison Square Garden in New York City and Candlestick Park in San Francisco. “It was getting very difficult for Stevens, and management may have been eager to sell,” says one source. Concurs Aramark”s Gillespie: “Stevens” profits changed drastically without the Madison Square Garden and Candlestick Park contracts. The company wasn”t losing money, but they weren”t in the forefront of the industry either.”

Speculation increased in October when rumors spread that Stevens, a fixture at Fenway Park, the home of the Boston Red Sox, had sold its business there to Aramark. Gillespie says, however, that Aramark did not obtain that contract until Stevens was sold in December. Under the agreement, Stevens, a limited partner in the ownership of the Red Sox for 15 years, turned its shares of the club over to Aramark.

Most of Stevens” 9,000 employees, including about 1,200 in New Jersey, will stay on in the company, according to Gillespie. “The concession workers and front-line managers will be retained,” he says. “We”re busy digesting them into our organization now.” The industry source, however, says that certain management jobs are probably in jeopardy. Stevens president and chairman William Koras, however, is safe. He has been named vice chairman of the leisure services group. “William brings the continuity established with the long-term contacts that Stevens has had,” Gillespie says. Aramark says it will merge both operations, but has not decided if it will keep Stevens” headquarters in Cranbury.

The legacy of Harry M. Stevens dates back to 1886, when Harry Mozley Stevens, a transplanted Englishman, started selling scorecards at a baseball game in Columbus, Ohio. The next year, Stevens founded his company, and in 1894 he landed the concession contract at the Polo Grounds in New York City, where he hawked beer, ice cream and hot dogs.

According to legend, Stevens did more than merely peddle food. He also put on a dramatic performance. The former bookseller would prance around the aisles of the ballpark, quoting the likes of Byron and Shakespeare, much to the delight of fans. Stevens later obtained concession contracts at Yankee Stadium, Fenway Park and most of the country”s major race tracks. Stevens also invented the soda straw. By the time he died in 1934, he had become an icon in the world of sports.

Stevens” company continued growing in the years following his death, watched over by succeeding generations of his family. The family owned all the company”s stock and occupied key management positions. Joseph B. Stevens, Stevens” grandson, for example, was the company”s chairman for several years.

In early 1989, the company moved its headquarters from New York City to Cranbury, where about 120 people were employed. When Koras became chairman in 1992, he was the first nonfamily member to hold the job.

Unlike Harry M. Stevens, Aramark is a much younger company, though it has had as successful a track record. The company was formed in 1959 by California”s Davre Davidson, who merged his merchandising company with a midwestern vending firm owned by William Fishman. The business was called Automatic Retailers of America (ARA).

From 1959 to 1963, Aramark obtained 150 local food service companies, which gave the firm a top spot in cafeterias at colleges, hospitals and work sites, including prisons. The company later went public and began diversifying into other service businesses such as publication distribution in 1967 and janitorial and maintenance services in 1970. In 1969 the company changed its name for the first time to the ARA Group. During the 1970s, Aramark acquired National Living Centers, which owned a series of elderly residential communities. It also entered such fields as emergency care and uniform rentals.

Companies in many fields were caught up in mergers and LBOs during the feisty 1980s, and Aramark was no exception. In 1984 William Siegel, a former Aramark director, and two partners offered Joseph Neubauer, Aramark”s chairman, $722 million for the company. Neubauer refused and retaliated by putting together a leveraged buyout to take Aramark private to avoid a hostile takeover. The deal was completed in December 1984, and Aramark purchased all of its outstanding shares for $917 million cash and assumed a $1.2 billion debt.

Since then, Aramark has repurchased shares from investment banks and employee-benefit plans to increase management”s stake to more than 90%. Aramark has had 40 consecutive quarters of growth, and revenues have increased from $3 billion to more than $5 billion in 10 years. Aramark also has become more aggressive than before and has continued by acquiring more and more businesses.

Last October the company changed its name from the ARA Group to Aramark. At the time, Neubauer said the new company would be positioned for “unprecedented growth.” That is just what has been happening, as the buyout of Harry M. Stevens indicates. Besides that transaction, Aramark has been active in other areas. In November the company paid some $130 million for TW Recreational Services, a subsidiary of Flagstar Companies of South Carolina. That transaction gives Aramark additional food service operations at more than 20 parks, including Yellowstone National Park and the Mount Rushmore National Memorial.

Now that Aramark owns Harry M. Stevens, will the new ownership result in a change in service? Samerjan, for one, believes that the Meadowlands Sports Complex will see little impact. “The change shouldn”t affect the service,” he says. “Aramark will assume the concession contract at the three facilities here that will continue under the new corporation.”

Subtle differences, however, may emerge in time. Aramark is known for offering spectators a wide variety of foods at stadiums and arenas around the country, including Camden Yards in Baltimore, where fans line up to buy hot barbecue sandwiches in Boog Powell”s Barbeque Pit, named for the former Baltimore Orioles star. Says Gillespie: “If you give people variety and entertainment, they will buy more.” Harry M. Stevens would have heartily approved of that winning philosophy. u