It has long been the complaint among those working in the UK catering industry that there is a dearth of good, current data about the sector, so any document that sheds a little extra light will be welcomed by caterers and analysts alike.
What adds extra value to the new ‘Vision – An Insight Into The Foodservice and Hospitality Management Sector 2015/16’ report is that it aims to be more than just an inward-looking summary of the current state of play.
It also sets out to provide an accurate, informative and attractive picture of a dynamic sector that might persuade young people consider a career in contract catering.
In his introduction to the report, Bob Cotton, former chief executive of the British Hospitality Association, highlights the skills of contract caterers and laments that they are not always recognised.
He says: “Contracting has always had two masters: the client, who picks up the tab – though much less so now than 50 years ago – and the customer, who chooses what to eat.
“Both have to be satisfied, and the contractor’s skill has always been focusing on providing food that the client is willing to sell at a price the customer is willing to pay. That skill is frequently underrated.
“At it’s extreme, the contractor has to provide three meals a day, seven days a week, for up to 52 weeks a year at a budget that would frighten most commercial restaurateurs.
“That skill, built over the past five decades of growth and development, lies in maintaining – indeed enhancing – quality while avoiding menu fatigue and budget overruns.”
He says the last 50 years have seen a steady commercialisation of the sector, which is becoming increasingly attuned to the changes and trends in the high street.
“Some contractors actually own and operate high street outlets, and are alive to the need for marketing and merchandising their products.
“Branding is now commonplace, and menu choice is much wider than it could ever have been at any time in the post-war years and subsequently.
“Not everyone – even those in the hospitality and catering industry, or in catering colleges and careers departments – realises that these great developments have taken place.”
He says old images of canteens persist in the popular imagination, while the reality is that modern contract catering represents “a world of opportunity”.
The report goes on to highlight just how wide that opportunity is – from a business and careers perspective – by listing just where the contract catering sector operates: business and industry, schools, higher education, hospitals, defence sites, offshore gas and oil sites, care homes, stadia, exhibition and conference venues, culture and heritage sites, parks, leisure centres, concession outlets in stations and airports, food services in hotels, local authority operations and judicial sites.
This listing provides a clearer idea of the scope covered by contract catering that no definition could hope to achieve.
The evolution of the market to encompass all these different areas of operation has gone hand in hand with a blurring of the edges as facility management companies begin to develop their own foodservice solutions, and contract caterers have come up with new service offerings and revenue lines.
The report says: “The UK contract catering market is relatively mature, and many leading providers have responded by bundling catering and other facilities management (FM) services.
“Many of the leading catering companies now offer additional services, enabling them to increase revenue per contract – the key industry driver – while leading FM groups and integrated service providers increasingly include catering as part of their bundled service offer.”
How has this played itself out in the market as it exists today? The report is clear: “The leaders of the broader service offer are Sodexo, ISS and Mitie. They have invested heavily over the years and developed their own strategies, which are proving effective.
“However, most of the catering players’ best performance is from either core food services or support services. These are inherently related to the core, such as reception services, which has not only recently taken off as a market but is setting new standards. It hints at what can be achieved by catering companies.”
But, the report authors concede that the importance of catering above many other services does not make market analysis straightforward.
“One argument is that integrated facilities service models provide cost savings and efficiency benefits, in particular from having a single point of contact for all services.
“However, others feel that an integrated provider – especially one that lacks the capabilities to self-deliver catering services – does not add enough value to justify its management fee, or that catering, being more important to staff morale than other services, is worth leaving to a specialist.”
The authors point out that while some of the largest operators, such as Sodexo and ISS, have expanded their offers to include a wide range of non-catering services, the fastest growing of the leading catering companies over the past five years has, in fact, been WSH Group, which has retained its focus on catering.
“Compass has seemingly returned to its roots with a focus on food, and there is a general feeling that this market-leading force is raising the bar in key areas.”
So what do the report authors consider the key trends and influences in the contract catering market over the next few years? Size is apparently a major factor – on the balance sheet and in the kitchen.
They say: “In the 1990s, any entrepreneurial company that had reached between £23–£35 million in annual sales was regarded as having reached its peak.”
Today, they point out, a group such as WSH (including brands such as BaxterStorey) is worth £595 million, with CH&Co (with its key brand Charlton House) turning over £180 million and the Waterfall Group (with brands including Taylor Shaw) at £72 million – all comfortably above that previous benchmark.
But the physical room these companies have to operate in to provide food has also changed.
“There is much greater demand on space within organisations, and caterers are being asked to find innovative solutions to provide good services from smaller and smaller spaces.”
The report also stresses that with consumers offered an increasing variety of food from a growing number of outlets, contractors have to compete by serving good quality food that is “engaging and seductive”.
Related to this, it says that contract catering companies must now look at the dynamic high street as their chief competition rather than each other.
Other trends it identifies are that clients in the business and industry, education and healthcare sectors will be demanding more healthy options on menus as they increasingly understand the link between diet and better health.
Hospitals, in particular, are going to be seeking “new food offerings so that the overall image of healthcare improves”, while contractors will also be challenged more to meet client demands for sustainability and eco-friendly policies in their operations.
The report adds: “More companies, schools, hospitals, stadia and other organisations want to play supporting roles in their local communities by either purchasing locally produced foods or employing local catering services.
“It is forecast that this will become a greater influence as the whole concept of community appears to be becoming very important again.”