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CONTRACT CATERING

CONTRACT CATERING . A Report On The Sector By Six Market Analysts: Geoff Carr, Leigh-Ann Jones, Hannah Pitt, Louise Sainsbury, Timothy Wilkinson, & Lindsey White. INTRODUCTION. Contract Catering Analytical Review Balanced Report of the Sector Current & Future State. Introduction.

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CONTRACT CATERING

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  1. CONTRACT CATERING A Report On The Sector By Six Market Analysts: Geoff Carr, Leigh-Ann Jones, Hannah Pitt, Louise Sainsbury, Timothy Wilkinson, & Lindsey White

  2. INTRODUCTION • Contract Catering • Analytical Review • Balanced Report of the Sector • Current & Future State Introduction

  3. 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

  4. MARKET SECTORS Source: BHA UK Contract Catering Survey 2001 Market Segmentation

  5. Low HIGH Market Share Stars Problem Education (University) Healthcare M.O.D. Public (Dept Stores / Other) Growth Cash Cow Business & Industry Education (Schools) Dogs Oil Rigs Welfare Low CONTRACT CATERING BCG Stars Education (University) Public (Dept Stores / Other) Problem Healthcare M.O.D. Market Segmentation

  6. 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

  7. Business & Industry Education (Universities) Reason: Saturated Market Reason:Unsaturated, High Growth Healthcare Oil Rigs Reason: Still growing though already established Reason:Fall in sales & outlets INDUSTRY SECTOR LIFE CYCLES Market Trends

  8. MARKET TRENDS (£M at 2000 prices) Source: Caterer.com 27th July 2001 Industry Reports Contract Catering Market Trends

  9. 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

  10. THE MARKET PLACE • Oligopoly • Compass • Sodexho • Three others • Initial, Aramark, Avanance • 3500 ‘Small Business’ Source: Mintel 2000 “Summary of Key Report Findings” Competitive Structure

  11. MARKET LEADERS • Sodexho • Compass • Branding • Price Setters • Diversification • Three other ‘Large Companies’ • 3500 Small Companies Competitive Structure

  12. 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

  13. 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

  14. 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

  15. OTHER COMPANIES Create Deals Contracts Granted To New Entrants Acquisitions Low Barriers, CCT/BV Smaller Companies ‘’Tender’’ FOOD & BEVERAGE SUPPLIERS STAFF AGENCIES EQUIPMENT SUPPLIERS CLIENTS / CUSTOMERS GOVERNMENT & BUSINESSES Big 2 Contract Giver CCT/BV Ownership Consumer Free Choice Clients Own Substitutes Substitutes Can Buy From Suppliers OTHER FOOD OUTLETS RETAIL OUTLETS SMALL BUSINESSES EATING FROM HOME VENDING MARKET FORCES CONTRACT CATERING & IN HOUSE CATERING Competitive Structure

  16. TRENDS IN CONTRACT TYPE • Cost Plus • Fixed Price / Cost • Performance Guarantee • Nil Subsidy • Partnership • Concession Source: Mintel 12/2000 “Market Size & Trends” Industry Background

  17. INDUSTRY HISTORY (80’s) • Decline in Industrial / Institutional • 1980 Education Act • Demise of Manufacturing • Increased unemployment (Recession) Adapted from: Mintel 12/2000 “Market Background” Industry Background

  18. INDUSTRY HISTORY (90’s) • Increase in Institutional / Industrial • Overall growth in late 90’s • 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

  19. 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

  20. 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

  21. Introduction of CCT / BV Food Hygiene Regulations Other Food Regulations Staff Regulations P.D.I Effect of the Euro Effect of the Recession Growth possibilities in right economic climate ENVIRONMENTAL ISSUES Political Economic Industry Analysis

  22. 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 ENVIRONMENTAL ISSUES Social Technological Industry Analysis

  23. STAKEHOLDERS • Customers • Client • Key Players • Shareholders • Government • Owners • Staff • Suppliers • Community Industry Analysis

  24. 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. SWOT ANALYSIS Industry Analysis

  25. 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

  26. 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 Thru’s” and mobile units. • Many sectors yet to be exploited. • Larger customer base for key players due to globalisation. Industry Analysis

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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_catering.htm Sources

  33. THANK YOUANY QUESTIONS?

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