Azami's plan makes perfect sense and completely fits his philosophy and aesthetic in terms of his character and role as the antagonist.
This is basically Capitalism vs Communism/Dictatorship (pick your poison).
Senzaemon was about diversity and competition. Azami gives no fucks about them. He gives no fucks about the students or their potential, He's only interested in spreading his ideal image of gourmet in the world and the students are his tools, Erina's flashback makes this very clear about his utilitarian methods.
His plan is to remove any sort of diversity, any sort of these impure cooking methods to make his ideal utopia of gourmet. His scheme is train students with his own gourmet methods (which will probably involve Erina levels of brainwashing) to cook only with his won gourmet style, to reach a certain benchmark, his benchmark, he'll weed out the stragglers, those he himself doesn't deem worthy and give special favoritism to those he sees are if not doing better are at least more conformist to his methods. He'll probably be using Erina's God tongue as the benchmark for his gourmet as he hammared his standards into her from childhood. He's not interested in training chefs for the sake of their careers. He has no qualms expelling talented students who won't conform to his regime, it's about his own egotism to spread his idea of gourmet. It's a very unfair, heavily biased form of teaching that does not prioritize individuality or ambition in the slightest perfectly contrasting Senzaemon's old regime of cooking through diversity and competition.
How will Azami implement his plan? Outlaw any forms of diverse cooking, centralize everything to fit into his system. Close down all dorms. Why? It's not just an issue of student housing, dorms and clubs are nests of diverse cooking. Like minded people getting together to reinforce their "impure" forms of cooking (even less themed dorms like the Polar Star reinforce diversity), they make it harder for him to extend his control, to use his brainwashing levels of gourmet teaching, to beat out the seed of diversity, he wants to eliminate any form of independence and initiative, he is not interested in it, the students are just his tools to spread his perfect cooking, their own skills and talent are irrelevant. His next phase is probably some sort of central dorm (or not, the students can go live at their homes, so long as they're not in groups) as well as some intense communist regime of group teaching to make his perfect army of mindless zombies. Anyone who does not conform is expendable, it doesn't matter how talented the student is, his entire plan is to bring them up to the same level of perfect skill anyway. Of course the shokugeki are a farce, this is not a game or a negotiation, this is outright elimination of any form of threat, the fake shokugeki are just a formality, a show to give the semblance of procedure when there is none.
His plan make perfect sense, fits his character perfectly and makes for a good foil thematically for the series which from chapter one was all about creativity and growth through failure and experimentation.
Also he looks like he ate somebody, this guy fucking creeps me out.
Don't ask me about Senzaemon, was it confirmed that he was responsible for the autonomous power of the council? Meh, if he is, he's an idiot though asking for Soma's help now isn't really a bad move since he doesn't have a lot of choice or freedom to do anything.