Aramark

What they do

Aramark provides food, hospitality, procurement and facility services to education, healthcare, business & industry, and sports, leisure & corrections clients, with the United States as its largest market supplemented by a 15-country footprint. The company operates in two reportable segments: FSS United States and FSS International. It is the exclusive provider of food and beverage services at most locations it serves and also provides facility services including plant operations and maintenance, custodial/housekeeping, energy management, grounds keeping and capital project management. Clients provide a captive customer base through on-site employees, students and patients, while sports and entertainment venues attract patrons for events.

Revenue drivers

• FSS United States — Generated $13,211.9 million of fiscal 2025 revenue and $717.5 million of operating income excluding corporate expenses, making it the larger of the two segments with roughly 71% of total company revenue.
• FSS International — Generated $5,294.4 million of fiscal 2025 revenue and $193.5 million of operating income, representing roughly 29% of total company revenue.
• Education sector — Part of FSS United States, this sector experienced the impact of the calendar shift from the 53rd week in fiscal 2025 that reduced third quarter fiscal 2026 revenue growth.
• Sports, Leisure & Corrections — FSS United States revenue growth in the third quarter of fiscal 2026 was led by higher per capita spending and fan attendance in Sports & Entertainment, including FIFA World Cup matches and the NBA/NHL playoffs, along with an expanded client portfolio.

Recent performance

In the third quarter of fiscal 2026, Aramark reported revenue of $5,057.9 million, up 9% from $4,626.5 million in the prior-year period. Operating income rose 18% to $215.6 million, and net income attributable to Aramark stockholders was $97.7 million, or $0.36 diluted EPS, up 34% GAAP. FSS United States revenue grew 8% to $3,496 million and FSS International revenue grew 13% to $1,562 million. The calendar shift from the 53rd week in fiscal 2025 reduced revenue growth by an estimated 2%, primarily in the Education sector; without that shift, revenue growth would have been approximately 11%.

Strategy

Management highlights broad-based net new business and base business momentum across sectors and geographies, with new client wins totaling more than $1.6 billion fiscal year to date, 51% higher than the comparable prior-year period, and client retention at record levels of approximately 98%. The company is expanding Aramark Nexus, including beginning premium hospitality services at its first Texas-based AI data center site with a hyperscaler, with mobilization underway at a second location, and a multi-year engagement with a leading AI data center colocation provider. Operating cash flow and free cash flow improved year over year, and the company proactively repaid $100 million of 2028 Term Loans following quarter-end. Management has once again raised its Organic Revenue growth expectations for fiscal 2026.

Risks

• Economic downturns — National and international economic downturns have reduced and could reduce demand for services in each reportable segment, leading to loss of business or pressure to contract on less favorable terms.
• Client financial distress — Financial distress and insolvency experienced by clients, especially larger clients, has in the past made it difficult for Aramark and may continue to do so.
• Inflation and supply chain — Inflation, supply chain disruptions, geopolitics, trade disputes, tariff increases, global energy shortages, and major central bank policy actions including interest rate increases could adversely affect results.
• Reduced client employment and spending — Economic hardship in the client base, including reduced employment levels at clients' locations and declining levels of business and customer spending, has impacted and may continue to impact the business.

Outlook

Management raised its Organic Revenue growth expectations for fiscal 2026, citing strong business trends across sectors and geographies. The company anticipates additional AI data center sites to be awarded following the first site with a hyperscaler and the mobilization underway at a second location. Aramark reported over $1.4 billion of cash availability at quarter-end and proactively repaid $100 million of 2028 Term Loans after the quarter.