CONTRACT CATERING

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CONTRACT CATERING

• A Report On The Sector By Six Market Analysts
• Geoff Carr, Leigh-Ann Jones,
• Hannah Pitt, Louise Sainsbury, Timothy Wilkinson,
  Lindsey White

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INTRODUCTION

• Contract Catering
• Analytical Review
• Balanced Report of the Sector
• Current Future State

Introduction
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MARKET DEFINITION

• An individual or company who in recognition of
  financial reward will undertake to administer,
  control and direct a specified catering operation
  within the guidelines stipulated by the client
  company
• Cotes, 1971

Market Definition
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MARKET SECTORS
Source BHA UK Contract Catering Survey 2001
Market Segmentation
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CONTRACT CATERING BCG
Problem Healthcare M.O.D.
Stars Education (University) Public (Dept Stores
/ Other)
Market Segmentation
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MARKET TRENDS

• Branded outlets increasingly important
• Trends interrupted by Foot Mouth Sept 11th
• Support services
• Maintenance
• Cleaning
• Gardening

Source Mintel 12/2000 Market Size Trends
Market Trends
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INDUSTRY SECTOR LIFE CYCLES
Market Trends
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MARKET TRENDS (M at 2000 prices)
Source Caterer.com 27th July 2001 Industry
Reports Contract Catering
Market Trends
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CONSUMER TRENDS

• Higher expectancy of quality
• Expectancy of value for money
• Shorter meal breaks - snacking
• Shift work increase - when should the canteen be
  open
• Demand a higher range of products including
• Established brands
• Organic
• Ethnic

Market Trends
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THE MARKET PLACE

• Oligopoly
• Compass
• Sodexho
• Three others
• Initial, Aramark, Avanance
• 3500 Small Business

Source Mintel 2000 Summary of Key Report
Findings
Competitive Structure
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MARKET LEADERS

• Sodexho
• Compass
• Branding
• Price Setters
• Diversification
• Three other Large Companies
• 3500 Small Companies

Competitive Structure
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SODEXHO

• A world leading multinational company
• UK Head Office Kenley, Surrey
• UK Ireland Business Industry largest market
• Clients include
• Merrill Lynch
• BAE Systems
• Result of merger between Gardener Merchant and
  French company Sodexho Alliance
• Sales Turnover 6.5billion (2000)
• Sodexho Prestige is leading leisure company.

Source Sodexho Vision For The Management Team
Competitive Structure
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ARAMARK UK

• 1 Of The Next Big 3
• Reading UK
• World Leader In Managed Services
• 4.47 Billion Turnover Worldwide (2000)
• Clients Include
• BP International
• Conoco
• Barclaycard
• Partnership Contracts

Source www.berkeley-scott.co.uk
Competitive Structure
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HALLIDAY CATERING SERVICES

• One of 3,500 Smaller Contract Caterers
• Wokingham UK
• Leading Privately Owned Contract Catering Company
• 16.5 Million Turnover
• Clients Include
• British Aerospace
• Oracle

Source www.berkeley-scott.co.uk
Competitive Structure
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MARKET FORCES
CONTRACT CATERING IN HOUSE CATERING
Competitive Structure
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TRENDS IN CONTRACT TYPE

• Cost Plus
• Fixed Price / Cost
• Performance Guarantee

• Nil Subsidy
• Partnership
• Concession

Source Mintel 12/2000 Market Size Trends
Industry Background
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INDUSTRY HISTORY (80s)

• Decline in Industrial / Institutional
• 1980 Education Act
• Demise of Manufacturing
• Increased unemployment (Recession)

Adapted from Mintel 12/2000 Market Background
Industry Background
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INDUSTRY HISTORY (90s)

• Increase in Institutional / Industrial
• Overall growth in late 90s
• Rise in numbers in further education
• Higher demand in health / welfare markets
• More Recent
• Compass / Granada
• High emphasis on aggressive acquisition
• Expansion into support services

Adapted from Mintel 12/2000 Market Background
Industry Background
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EMPLOYMENT

• Steady Decline
• Whole of Hospitality Industry
• Maintained steady proportion of 12 throughout
  97-99
• Increase in full time

Source Labour Market Review, Hospitality
Training Foundation 2000
Industry Background
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LEGISLATION

• Staff
• National Minimum Wage (99)
• Working Time Directive (98)
• Paternity Leave (99), Part Time Workers (00)
• Food
• Genetically Modified Foods
• Food Hygiene
• Tendering
• Competitive Compulsory Tendering
• Best Value

Adapted from Mintel 12/2000 Market Background,
Summary of Key Report Findings www.gov.uk
Industry Background
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Political
ENVIRONMENTAL ISSUES
Economic

• P.D.I
• Effect of the Euro
• Effect of the Recession
• Growth possibilities in right economic climate

• Introduction of CCT / BV
• Food Hygiene Regulations
• Other Food Regulations
• Staff Regulations

Industry Analysis
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Social
ENVIRONMENTAL ISSUES
Technological

• Organic foods
• Branding
• Value for money
• Life style changes
• Concern about diet

• Increase flexibility in Cook / freeze and Cook
  chill processes
• Cashless systems
• Loyalty schemes

Industry Analysis
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STAKEHOLDERS

• Customers
• Client
• Key Players
• Shareholders
• Government

• Owners
• Staff
• Suppliers
• Community

Industry Analysis
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SWOT ANALYSIS

• STRENGTHS
• Expansion into support services.
• A continually expanding industry within the UK
• Recent trends towards the famous-names foods
  franchising sector
• Moves towards outsourcing non-core activities, to
  minimise cost and maximise efficiency.
• New consumer tastes and adventurous eating
  patterns and food tastes.

Industry Analysis
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SWOT ANALYSIS

• WEAKNESSES
• Poor consumer research within the market.
• Health conscious image overlooked by branded
  fast food products
• Over crowded dining areas long queues make
  uncomfortable atmospheres.
• Market entry is relatively hard.
• Tightening of health and safety regulations.
• Limited business marketing development for
  smaller companies.
• Grazing

Industry Analysis
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SWOT ANALYSIS

• OPPORTUNITIES
• Emphasis on fresh foods
• Growth of leisure facilities number or visitors
• Expansion into prison management
• New technologies
• Less than half of school children eat school
  meals
• Ability of the sector to adapt to the
  preoccupation of customers.
• Broadening of consumer tastes, i.e. ethnic
• Diversification of methods of distribution i.e.
  Drive Thrus and mobile units.
• Many sectors yet to be exploited.
• Larger customer base for key players due to
  globalisation.

Industry Analysis
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SWOT ANALYSIS

• THREATS
• Leading companies in industry have grown by
  acquisition.
• Increased ready meals
• Flexible working hours
• Health Dietary Issues
• The increasing number of small food retail
  operations i.e. sandwich shops.
• Closure of Client Companies.
• Movements toward vending operations.
• Minimum wage requirements
• Move from Sterling to Euro
• Decreasing subsidy on meals

Industry Analysis
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THE GLOBAL MARKET

• Expansion Viable
• Sodexho
• 1999 - 17 UK, 17 Europe
• Change of name
• Mergers, Acquisitions, Strategic Alliances
• Current UK companies operate in over 70 countries
• Major Potential Growth
• Latin America
• Asia
• Africa

Global Market
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ONE YEAR FORECAST

• Compass Sodexho to continue with aggressive
  acquisition policies
• Less sub-contracting from main two
• Little growth in Business Industry
• Growth in Catering for the Public sector
• Economic slowdown growth slowdown
• Branded Outlet expansion (continued trend)
• Interest rates low
• Tax increases likely

Future Forecasts
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FIVE YEAR FORECAST

• Compass Sodexho continue to grow
• Less competition
• Less sub contracting
• Main growth in public sector
• Economic slowdown
• Continued branded expansion
• Tax increases
• Less small companies (recession)

Future Forecasts
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SOURCES OF INFORMATION

• British Hospitality UK Contract Catering Survey
  2001, BHA, London
• Caterer.com Industry Reports Contract Catering
  27th July 2001
• Cuomo G Vignal M, 1998, Gruppo Massone
  Acquisition Venture into the UK, British Food
  Journal 100/2 pp.65-75
• Labour Market Review, Hospitality Training
  Foundation 2000
• Sodexho Vision for the Management Team, Spring
  2001
• Wilson M et al, 2001, Contract Catering a
  positional paper, International Journal of
  Hospitality Management, 20/2 pp.201-218
• Wilson M et al, 1997, The UK Contract Catering
  Sector of the Hospitality Industry, Facilities,
  15/7/8 pp.177-186

Sources
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SOURCES OF INFORMATION

• Mintel Report Code 12/2000
• Summary Of Key Report Findings
• Market Background
• Market Size Trends
• Market Segmentation
• The Supply Structure
• The Future
• Forecast
• www.gov.uk
• www.berkeley-scott.co.uk/jobseeker_help/careers_ca
  tering.htm

Sources
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THANK YOUANY QUESTIONS?