With Ontario schools mandating that only healthy food be served at school cafeterias, some food providers are saying it's going to be so hard to make a profit selling fresh food, they're closing up shop.

But it's a different story at the University of Winnipeg.

The school switched to a food provider two years ago that's been serving up fresh, healthy and often organic and ethically traded food. Whenever possible, they use locally sourced foods and organic ingredients. And they've found that what's great for the waistline is also great for their bottom line.

Diversity Food Services now runs the food service outlets at the university. They say that switching over their cafeterias' fare to a menu of nutritious, fairly priced and ethnically diverse food has been quite profitable.

Student enrolment at the university was up about 3.6 per cent last year, but food sales are up 30 per cent, says Ben Kramer, Diversity's executive chef.

That's a far cry from what some caterers at Ontario schools have reported. Some says revenues at their cafeterias are down 30 per cent since the province implemented the School Food and Beverage Policy. That policy calls for 80 per cent of a school's menu to include foods that are high in nutrients and low in fat, sugar and sodium.

One of the caterers servicing school cafeterias at schools in Renfrew County outside Ottawa decided to pull out even before the policy kicked in, saying they would have had to eliminate 80 per cent of their menu items. They also didn't want to compete with the nearby fast food outlets, where they presumed students would flock instead.

But that's not been the experience at the University of Winnipeg. Students there have been staying on campus and buying up the new fresher fare offered by Diversity, Kramer says.

While preparing fresh food is more challenging that serving frozen food that's thrown into a deep-fryer, Kramer says it's completely doable.

"Fresh food, yeah, it's more perishable and more delicate, but it's no different from restaurants. Restaurants serve fresh food all the time and they're profitable," Kramer told CTV's Canada AM Thursday from Winnipeg.

Kramer says his company tries to offer a diverse menu that will appeal to all tastes and ethnicities.

"We have a breakfast wrap that's quite popular, our ‘Huevos Wrap,' which is made with organic beans, free-range eggs, homemade salsa and some local cheese," he describes.

One of the restaurants on campus is called Malecon, which is Spanish for ‘street food,' and it serves made-on-the-spot tacos, small pizzas and sandwiches. There's also a small café called ‘Bodhi,' which is Java for enlightenment where a local roaster sells fair trade organic coffee, quick bagels, sandwiches and homemade baked goods.

Kari Broadfoot, a fourth-year student says she and her friends love the salad bars, as well as the noodle bowls, where users can choose exactly which vegetables, proteins and sauces go into a steaming bowl of Asian noodles.

"The noodle bowl section is a great way to select what food you want in your noodle bowl. You have a complete range of what you can add to it. Everyone loves that," she says.

The food services were changed at the behest of university president and vice-chancellor Lloyd Axworthy, who was discouraged when he came to the school and saw how poorly the school was fairing in magazine ratings because of its food.

They dumped their caterer and created Diversity Food Services, with the help of the University of Winnipeg's Community Renewal Corporation and a non-profit agency that helps fledgling new businesses.