February 17, 2009

City Bucks Allegedly Creates Uneven Playing Field Among Vendors

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For some students living off-campus, City Bucks provides a convenient alternative to cash. For businesses, however, City Bucks can mean much more than a mere convenience.
City Bucks allows registered students and faculty with a current and valid Cornell ID to make purchases at numerous participating off-campus restaurants and supermarkets.
Although interest in joining the City Bucks program still remains high among many restaurants and vendors in Collegetown and the surrounding area, the program has not been accepting any new vendor in the past several years.
“The program has been closed to new applicants for the last several years and there no longer is a waiting list. The entire program is currently under review and, if a decision is made to reopen it to additional restaurants, new procedures for applying will be issued,” Frank Carollo, City Bucks Liaison for Cornell Dining, stated in an e-mail.
The program is not continuing to expand because Cornell Dining has determined that significant expansion in the number of merchants would require additional investment, which would “not be the best use of Cornell Dining’s resources at this time,” Carollo stated.
Kevin Sullivan, manager of Jack’s Collegetown Grill has been trying to get on the program because it promises a larger customer base. Due to a turnover of new students every four years, Sullivan said that it is difficult to retain customers and important to bring in new ones every year. He added that not accepting City Bucks would only add to already tough situation. He also said that businesses accepting City Bucks could be at an advantage as City Bucks customers accounted for a large portion of their businesses.
“If we don’t have the same ability to accept funds from those customers, it doesn’t matter who serves better food at a bet ter price; we’re out. We can’t be competitive at all,” Sullivan said. “It’s almost heartbreaking to turn people away because we can’t accept their money. With all the other things we have to worry about with business, it’s just one more thing that you shouldn’t have to worry about.”
Sullivan claims to have inquired repeatedly. Despite the “gracious and very friendly” communication between him and Cornell Dining, Sullivan’s chain still could not operate with City Bucks.
“It has created an unfair marketplace with this card,” Sullivan said.
In response to Sullivan’s claim, Carollo stated: “We have kept track of any establishments that have inquired about the program and possible participation in it in order to contact them if/when a decision is made to reopen it. I personally have no record of an inquiry from Jack’s Collegetown Grill since I have been in this position since January 2007.”
Cornell Dining introduced the City Bucks program in the early 2000s to provide a supplement to on-campus meal plan program, so students would have options for dining off-campus through a “cash-less” system.
“Students open a City Bucks debit account — which is separate from Big Red Bucks or any other on-campus account — and can use their ID cards to pay for meals at participating City Bucks restaurants or stores off campus. The amount of that purchase is then deducted from their City Bucks account. Staff and faculty can also participate in the City Bucks program,” Carollo stated.
Gregar Brous, the manager of Collegetown Bagels, explained how Cornell actually approached him to take part in the City Bucks program. As the rates Cornell was charging per transaction were “very high,” he was hesitant to participate in the beginning.
According to Brous, the program charges between 4 to 8 percent for every sale using City Bucks. Eventually, Brous accepted Cornell’s offer because they were charged on a sliding scale.
“The way the sliding scale works is that as your volume grows, your percentage drops. We are the highest user of City Bucks in the city, so our percentage is always at 4 percent,” Brous said.
Carollo, however, stated that Cornell does not receive a commission on every individual transaction. Rather, the participating vendors’ total weekly City Bucks sales determine the amount of commission paid to Cornell Dining, which is applied to that total amount. The commission rate ranges from zero percent to eight percent “to defray Cornell Dining’s administrative costs,” Carollo stated.
Brous said that the City Bucks Program has not increased his sales, but “maintained” the sales that they have.
As the volume of customers in Collegetown Bagels is high, Brous said he did not want to back out of the program. Collegetown Bagels has a loyal customer base who uses City Bucks. The point, according to Brous, is “not [to] upset customers.”
“We would like it to be accessible to everyone and we don’t want displaced customers. If some people only have City Bucks as their means for spending then we feel like they should have the opportunity to come in here just like anybody else. We just try to keep everybody happy,” Brous said.
The City Bucks program is currently under review by Cornell Dining for the purpose of determining the best direction in which to take the program, according to Carollo. Cornell Dining’s primary commitment is to on-campus dining, with City Bucks being an option for off-campus food.
“This approach reflects prudent management and responsible stewardship in the context of Cornell Dining’s overall mission to provide exceptional food and service to the Cornell community — and is especially critical now, given the current economic climate,” Carollo stated.