Dear Shirley Everett and Michael Gratz,
More than 1,400 students and I are disappointed that under your leadership, Stanford Residential and Dining Enterprises (R&DE) sought to compete for the Forbes Family Cafe space in Huang Engineering Center, soon to be vacated by Ike’s Place. By and large, Stanford students prefer Ike’s to R&DE’s restaurants. I can’t compare Ike’s to your replacement offering, because you haven’t even declared what kinds of food it will serve.
Although some students griped about Ike’s price increase, more students gripe that R&DE’s prices are even higher. R&DE’s “grab and go” bottled drinks are 20-30 percent more expensive than those sold by independent vendors, with a nearly 100 percent markup. For example, an 8 oz. Red Bull at Tresidder Express costs $2.29, but the same item at Munger Market costs $3.75. R&DE’s high prices, skimpy product offerings and minimal operating hours are all reasons why R&DE should not be opening any more restaurants on campus. Do you really think students want more restaurants that are only open from 11AM-2PM, five days per week?
Furthermore, it is appalling that you are able to operate your restaurants tax-free under Stanford’s 501(c)(3) status. As you know, R&DE restaurants fail the IRS’s three-part test for Unrelated Business Income. Per IRS Publication 598, R&DE restaurants are 1) “A trade or business,” 2) “Regularly carried on” and 3) “Not substantially related to furthering the exempt purpose of the organization” (that organization is Stanford University).
Despite its good intentions, R&DE Hospitalities & Auxiliaries doesn’t seem to be acting “in support of Stanford’s academic mission.” Remember, R&DE’s existing restaurants would be paying a 30-38 percent Unrelated Business Income Tax if it weren’t for the IRS’s broadly defined “Convenience of Members” exemption. (However, I would argue that R&DE’s restaurants are not convenient for students, faculty or visitors.) R&DE restaurants unfairly outcompete private vendors that actually have to pay business taxes. Your vast $180 million annual budget will only grow now that you have eliminated one of your largest competitors.
Enough is enough. Stop expanding your restaurant business. “Fundraising” via food sales is not appropriate, and we deserve better.
Students want high-quality independent vendors, like Ike’s, on Stanford’s campus. In fact, a petition to save Ike’s has garnered more than 1,000 signatures in the last 48 hours, adding up to over 1,460 signatures total.
We ask that you forfeit your newly awarded lease in Huang Engineering Center.
Andrew Aude ’16
Contact Andrew Aude at firstname.lastname@example.org.