Canterbury District Health Board is to drop controversial catering company Compass Group and prepare meals in its own kitchens.
The health board announced this morning it would not renew the contract when it expired at the end of June.
Board chief executive David Meates said doing its own catering would save money and give the hospital more control over the food on offer.
Compass said the ending of its contract had nothing to do with its product's quality.
The company's chief operating officer, Julian Baldey, said the health board would be using the systems and facilities Compass Group developed when they take over in July.
Mr Baldey said the company would be working with the health board during the transition.
Compass has provided food at many hospitals across the country and some of its meals have been described as "disgusting" by some patients.
Dissatisfaction with the food provided in Southland culminated in protests outside Dunedin Hospital and a petition to end the company's contract.
Separately, Compass reached a confidential settlement with 10 former hospital workers last July, who had claimed they were owed $30,000 each by the company.
The company provides foods for hospital meals, cafes and the meals-on-wheels service.
Last year Compass increased prices for the DHBs that had signed up to its 15-year nationwide contract, due to lower than expected uptake from the country's health boards, and was backdating the higher prices.