Every item in a prison--from the food on the plastic trays to the uniforms worn by prisoners and guards--is a potential business opportunity. For the purposes of our analysis, the ‘prison goods market’ includes the supply of:
- Prison food service (the food served at meal times in the cafeterias)
- Commissary: The items that prisoners may purchase from the ‘prison store.’ This includes supplemental food and snacks, hygiene items like soap and toothpaste, electronics like TV’s and cd players, clothing and shoes, cigarettes, dictionaries, and greeting cards to send home to family
- Vending: Vending machines in the prison visitation rooms
- Clothing: Uniforms for both prisoners and guards
- Furniture: Metal bunks and toilets for cells, desks and office furniture for administration
The main companies involved in this sector are:
Aramark, of Philadelphia, PA (NYSE: ARMK)
Target Hospitality Corp, of The Woodlands, TX (NASDAQ: TH)
Summit Food Services Management LLC, owned by Elior Group SA, of Paris, France (EPA:ELIOR)
Keefe Group, owned by HIG Capital LLC, of Miami, FL (Private Equity)
Trinity Services Group, owned by HIG Capital LLC, of Miami, FL (Private Equity)
Bob Barker Company, Inc., of Fuquay-Varina, NC (Private)
Tigg’s Canteen Services, Inc., of Grand Rapids, MI (Private)
Union Supply Group Inc., or Rancho Domingo, CA (Private)
Food Service and Commissary
While specific data on the extent of privatization is not available, as early as 1994, all but three US states had at least one contract for the private provision of inmate meals. As of 2015, state contracts have reportedly been as high as $160 million.
This market is characterized by the proliferation of many small, regionally-centered companies which provide a combination of food service and commissary offerings focused exclusively in corrections. However, dominating the scene are global corporations which combine correctional food, commissary, and laundry services with similar operations in the sporting, educational, health, and commercial industries. A good example is Sodexo, whose tag line is, “Quality of Life Services.”
Sodexo is a multinational company based in France that provides food services to schools, college campuses, the U.S. military, and other government entities across the United States. With about $8.8 billion in annual revenues from operations in North America, Sodexo is a primary driver of the privatization and outsourcing of food services in America. Sodexo also has a “Justice Services” sector which designs, builds and provides services in prisons, and the community.
In roughly half of US prisons, the commissary is operated by a private contractor. This means that while the prisoner may be the end-user who hands her money over for shower shoes or a radio, it’s the prison staff (the warden or the purchasing department, perhaps) that decides which commissary company will be on premises and what products prisoners can choose from.
It also means that the companies can select the products available and set their own prices without worrying about competition. Prisoners are unable to “shop around” for cheaper goods.
Other Goods and Services
The largest providers of goods and services to prisons are not publicly traded companies, yet their market reach (generally through affiliates and subsidiaries) is extensive. For example, CentricGroup LLC, a holding company, owns Keefe Group, which includes affiliates Keefe Supply Company, Keefe Commissary Network, Access Securepak, Access Corrections, ICSolutions and Advanced Technologies Group. Keefe bills itself as “the nation’s leading supplier of food products, personal care products, electronics, clothing, technology, telecommunications and software solutions to the correctional market.”
While a host of suppliers have found prisons and jails to be a unique niche, perhaps none has adapted to the new marketplace as masterfully as Bob Barker Industries. Founded in the 1970s and now based in Fuquay-Varina, North Carolina, Bob Barker (no connection to the former TV game show host) produces a wide range of goods for prisoners and prison staff. Barker's products include a variety of cheaply made goods for the incarcerated: jumpsuits, sandals, T-shirts, board games, and black-and-white-striped canvas shoes. They also sell steel stools and benches for day rooms and yards.
Bob Barker today sells about 5,000 different items, making it the largest detention supplier in the country. Though the company's finances are not public, they earn an estimated $100 million a year in revenue.
Controversies surrounding privatized correctional food services are myriad. The most common include: exorbitant and fraudulent costs charged to taxpayers, inedible food and malnutrition among prisoners resulting in riots, severe health code violations, the local economic impact of outsourcing food supplies to large distributors, employee abuse of inmates, as well as public and inmate safety issues resulting from inadequate staff training.
Censure of these companies’ practices has come mainly in three forms: litigation, government-imposed fines or contract cancellations, and boycott efforts. In terms of litigation, inmates have filed class action lawsuits against companies and the prisons which employ them for violation of their constitutional right against cruel and unusual punishment. Local, state, and federal government agencies have investigated these large companies at length, most notably for fraud, and either levied fines or dropped their contracts altogether as a result.
Finally, university students whose institutions contract with these large food service providers who also profit from the corrections market have created effective boycott campaigns. Such campaigns focus on either forcing the companies in question to drop their corrections business, or on severing ties with the company altogether.
The only publicly traded companies in this arena are in the Food Service sector: Compass Group, Aramark, and Sodexo, which rank respectively as the first, second, and third largest food service providers in the US. Out of these three, Aramark is the only company to operate its corrections segment exclusively in the United States, while Compass Group and Sodexo’s core corrections segments are in the international market. Aramark is the single largest prison food service provider in the US as of 2015.