CONTRACT CATERING A Report On The Sector By Six Market Analysts: Geoff Carr, Leigh-Ann Jones, Hannah...
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Transcript of CONTRACT CATERING A Report On The Sector By Six Market Analysts: Geoff Carr, Leigh-Ann Jones, Hannah...
CONTRACT CATERING CONTRACT CATERING
A Report On The Sector By Six Market Analysts: A Report On The Sector By Six Market Analysts:
Geoff Carr, Leigh-Ann Jones,Geoff Carr, Leigh-Ann Jones,
Hannah Pitt, Louise Sainsbury, Timothy Wilkinson, Hannah Pitt, Louise Sainsbury, Timothy Wilkinson, & Lindsey White& Lindsey White
INTRODUCTIONINTRODUCTION
Contract CateringContract Catering
Analytical ReviewAnalytical Review
Balanced Report of the SectorBalanced Report of the Sector
Current & Future StateCurrent & Future State
Introduction
MARKET DEFINITIONMARKET DEFINITION
‘‘An individual or company who in An individual or company who in recognition of financial reward will recognition of financial reward will undertake to administer, control and direct undertake to administer, control and direct a specified catering operation within the a specified catering operation within the guidelines stipulated by the [client] guidelines stipulated by the [client] company’company’
• Cotes, 1971
Market Definition
0% 20% 40% 60% 80% 100%
1992
1994
1996
1998
2000
Business & Industry Healthcare Education
Local Authority M.O.D. Oil Rigs
Catering for the Public
MARKET SECTORSMARKET SECTORS
Market Segmentation
Source: BHA UK Contract Catering Survey 2001
DogsDogs
Oil Rigs
Welfare
Cash CowCash Cow
Business & IndustryEducation (Schools)
ProblemProblemEducation (University)
Healthcare
M.O.D.Public (Dept Stores / Other)
StarsStars
Market Share LowHIGH
Low
Growth
ProblemProblem
Healthcare
M.O.D.
StarsStarsEducation (University)
Public (Dept Stores / Other)
CONTRACT CATERING BCGCONTRACT CATERING BCG
Market Segmentation
MARKET TRENDSMARKET TRENDS
Branded outlets Branded outlets increasingly importantincreasingly important
Trends interrupted by Trends interrupted by Foot & Mouth & Sept Foot & Mouth & Sept 1111thth
Support servicesSupport services– MaintenanceMaintenance– CleaningCleaning– GardeningGardening
Number Of High Street & In House Brands
0
500
1000
1500
2000
2500
3000
95 96 97 98 99Year
Ou
tlet
s
High Street Brands
In House Brands
Market Trends
Source: Mintel 12/2000 “Market Size & Trends”
INDUSTRY SECTOR LIFE CYCLESINDUSTRY SECTOR LIFE CYCLES
Healthcare Oil Rigs
Education (Universities)
Business & Industry
Reason: Saturated Market Reason:Unsaturated, High Growth
Reason: Still growing though already established
Reason:Fall in sales & outlets Market Trends
MARKET TRENDS MARKET TRENDS (£M at 2000 prices)(£M at 2000 prices)
UK Contract Catering Market, 95 - 2000
0
500
1000
1500
2000
2500
3000
3500
95 96 97 98 99 00Year
Val
ue
(£M
at
2000
p
rice
s)
Market Trends
Source: Caterer.com 27th July 2001 Industry Reports
Contract Catering
CONSUMER TRENDSCONSUMER TRENDS Higher expectancy of qualityHigher expectancy of quality Expectancy of value for moneyExpectancy of value for money Shorter meal breaks - snackingShorter meal breaks - snacking Shift work increase - when should the canteen be Shift work increase - when should the canteen be
openopen Demand a higher range of products including:Demand a higher range of products including:
– Established brandsEstablished brands– OrganicOrganic– EthnicEthnic
Market Trends
THE MARKET PLACETHE MARKET PLACE
79%
8%
13%
Compass / Sodexho3 500 Small CompaniesAramark UK, Initial & Avanance
OligopolyOligopoly– CompassCompass– SodexhoSodexho
Three othersThree others– Initial, Aramark, AvananceInitial, Aramark, Avanance
3500 ‘Small Business’3500 ‘Small Business’
Competitive Structure
Source: Mintel 2000 “Summary of Key Report Findings”
MARKET LEADERSMARKET LEADERS
SodexhoSodexho
CompassCompass– BrandingBranding– Price SettersPrice Setters– DiversificationDiversification
Three other ‘Large Companies’Three other ‘Large Companies’
3500 Small Companies3500 Small Companies
Competitive Structure
SODEXHOSODEXHO 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.
Competitive Structure
Source: Sodexho Vision For The Management Team
ARAMARK UKARAMARK UK1 Of The Next ‘Big 3’1 Of The Next ‘Big 3’Reading UKReading UKWorld Leader In Managed ServicesWorld Leader In Managed Services£4.47 Billion Turnover Worldwide £4.47 Billion Turnover Worldwide (2000)(2000)
Clients Include:Clients Include:– BP International BP International – ConocoConoco– BarclaycardBarclaycard
Partnership ContractsPartnership Contracts
Competitive Structure
Source: www.berkeley-scott.co.uk
HALLIDAY CATERING SERVICESHALLIDAY CATERING SERVICES
One of 3,500 Smaller Contract CaterersOne of 3,500 Smaller Contract CaterersWokingham UKWokingham UKLeading Privately Owned Contract Leading Privately Owned Contract
Catering CompanyCatering Company£16.5 Million Turnover£16.5 Million TurnoverClients Include:Clients Include:
– British AerospaceBritish Aerospace– OracleOracle
Competitive Structure
Source: www.berkeley-scott.co.uk
MARKET FORCESMARKET FORCES
CONTRACT CONTRACT CATERINGCATERING
&&IN HOUSE IN HOUSE CATERINGCATERING
CLIENTS / CUSTOMERS
GOVERNMENT & BUSINESSES
FOOD & BEVERAGE SUPPLIERS
STAFF AGENCIES
EQUIPMENT SUPPLIERS
Competitive Structure
OTHER FOOD OUTLETS
RETAIL OUTLETS
SMALL BUSINESSES
EATING FROM HOME
VENDING
OTHER COMPANIES
Create Deals
Big 2
Smaller
Companies
Acquisitions Low Barriers, CCT/BV
Contracts Granted To New Entrants
‘’Tender’’
Contract Giver CCT/BV
Clients Own Substitutes
Substitutes Can Buy From Suppliers
Ownership Consumer Free Choice
TRENDS IN CONTRACT TYPETRENDS IN CONTRACT TYPE
0
2000
4000
6000
8000
10000
Cost Plus Fixed Price PerformanceGuarantee
TRENDS IN CONTRACT TYPE (main three)
95
99
Cost PlusCost Plus Fixed Price / CostFixed Price / Cost Performance GuaranteePerformance Guarantee
Nil SubsidyNil Subsidy PartnershipPartnership ConcessionConcession
Industry Background
Source: Mintel 12/2000 “Market Size & Trends”
INDUSTRY HISTORY (80’s)INDUSTRY HISTORY (80’s)
Decline in Industrial / InstitutionalDecline in Industrial / Institutional– 1980 Education Act1980 Education Act– Demise of ManufacturingDemise of Manufacturing– Increased unemployment (Recession)Increased unemployment (Recession)
Industry Background
Adapted from: Mintel 12/2000 “Market
Background”
INDUSTRY HISTORY (90’s)INDUSTRY HISTORY (90’s)
Increase in Institutional / IndustrialIncrease in Institutional / Industrial– Overall growth in late 90’sOverall growth in late 90’s– Rise in numbers in further educationRise in numbers in further education– Higher demand in health / welfare marketsHigher demand in health / welfare markets
More RecentMore Recent– Compass / GranadaCompass / Granada– High emphasis on aggressive acquisition High emphasis on aggressive acquisition – Expansion into support servicesExpansion into support services
Industry Background
Adapted from: Mintel 12/2000 “Market
Background”
EMPLOYMENTEMPLOYMENT
Steady DeclineSteady Decline– Whole of Hospitality Whole of Hospitality
IndustryIndustry– Maintained steady Maintained steady
proportion of 12% proportion of 12% throughout 97-99throughout 97-99
Increase in full timeIncrease in full time
Restaurants41% Hotels
21%
Pubs, Clubs and Bars
26%
Contract Catering
12%
Industry Background
Source: Labour Market Review, Hospitality Training Foundation 2000
LEGISLATIONLEGISLATIONStaffStaff
– National Minimum Wage (99)National Minimum Wage (99)– Working Time Directive (98)Working Time Directive (98)– Paternity Leave (99), Part Time Workers (00)Paternity Leave (99), Part Time Workers (00)
FoodFood– Genetically Modified FoodsGenetically Modified Foods– Food Hygiene Food Hygiene
TenderingTendering– Competitive Compulsory TenderingCompetitive Compulsory Tendering– Best ValueBest Value
Industry Background
Adapted from: Mintel 12/2000 “Market Background”, “Summary of Key Report Findings” & www.gov.uk
PoliticalPolitical Introduction of CCT / Introduction of CCT /
BVBV Food Hygiene Food Hygiene
RegulationsRegulations Other Food Other Food
RegulationsRegulations Staff RegulationsStaff Regulations
P.D.IP.D.I Effect of the EuroEffect of the Euro Effect of the Effect of the
RecessionRecession Growth possibilities Growth possibilities
in right economic in right economic climateclimate
EconomicEconomic
ENVIRONMENTAL ISSUESENVIRONMENTAL ISSUES
Industry Analysis
SocialSocial Organic foodsOrganic foods BrandingBranding Value for moneyValue for money Life style changesLife style changes Concern about dietConcern about diet
Increase flexibility in Increase flexibility in Cook / freeze and Cook / freeze and Cook chill processesCook chill processes
Cashless systemsCashless systems Loyalty schemesLoyalty schemes
TechnologicalTechnological
Industry Analysis
ENVIRONMENTAL ISSUESENVIRONMENTAL ISSUES
STAKEHOLDERSSTAKEHOLDERS
CustomersCustomersClientClientKey PlayersKey PlayersShareholdersShareholdersGovernmentGovernment
OwnersOwnersStaffStaffSuppliersSuppliersCommunityCommunity
Industry Analysis
SWOT ANALYSISSWOT ANALYSISSTRENGTHSSTRENGTHS Expansion into support services.Expansion into support services.
A continually expanding industry within the UKA continually expanding industry within the UK
Recent trends towards the famous-names foods Recent trends towards the famous-names foods franchising sectorfranchising sector
Moves towards outsourcing non-core activities, Moves towards outsourcing non-core activities, to minimise cost and maximise efficiency. to minimise cost and maximise efficiency.
New consumer tastes and adventurous eating New consumer tastes and adventurous eating patterns and food tastes.patterns and food tastes.
Industry Analysis
SWOT ANALYSISSWOT ANALYSISWEAKNESSESWEAKNESSES Poor consumer research within the market.Poor consumer research within the market. Health conscious image overlooked by branded fast food Health conscious image overlooked by branded fast food
productsproducts Over crowded dining areas & long queues make uncomfortable Over crowded dining areas & long queues make uncomfortable
atmospheres.atmospheres.
Market entry is relatively hard.Market entry is relatively hard. Tightening of health and safety regulations.Tightening of health and safety regulations. Limited business marketing & development for smaller Limited business marketing & development for smaller
companies.companies. ““Grazing”Grazing”
Industry Analysis
OPPORTUNITIESOPPORTUNITIES Emphasis on fresh foodsEmphasis on fresh foods Growth of leisure facilities & number or visitorsGrowth of leisure facilities & number or visitors Expansion into prison managementExpansion into prison management New technologiesNew technologies Less than half of school children eat school mealsLess than half of school children eat school meals Ability of the sector to adapt to the preoccupation of customers.Ability of the sector to adapt to the preoccupation of customers. Broadening of consumer tastes, i.e. ethnicBroadening of consumer tastes, i.e. ethnic Diversification of methods of distribution i.e. “Drive Thru’s” and Diversification of methods of distribution i.e. “Drive Thru’s” and
mobile units.mobile units. Many sectors yet to be exploited. Many sectors yet to be exploited. Larger customer base for key players due to globalisation.Larger customer base for key players due to globalisation.
SWOT ANALYSISSWOT ANALYSIS
Industry Analysis
Industry Analysis
SWOT ANALYSISSWOT ANALYSISTHREATSTHREATS Leading companies in industry have grown by Leading companies in industry have grown by
acquisition.acquisition. Increased ready meals Increased ready meals Flexible working hoursFlexible working hours Health & Dietary Issues Health & Dietary Issues The increasing number of small food retail The increasing number of small food retail
operations i.e. sandwich shops.operations i.e. sandwich shops. Closure of Client Companies.Closure of Client Companies. Movements toward vending operations.Movements toward vending operations. Minimum wage requirementsMinimum wage requirements Move from Sterling to EuroMove from Sterling to Euro Decreasing subsidy on mealsDecreasing subsidy on meals
THE GLOBAL MARKETTHE GLOBAL MARKET Expansion – ViableExpansion – Viable
SodexhoSodexho– 1999 - 17% UK, 17% Europe1999 - 17% UK, 17% Europe– Change of nameChange of name
Mergers, Acquisitions, Strategic AlliancesMergers, Acquisitions, Strategic Alliances– Current UK companies operate in over 70 countriesCurrent UK companies operate in over 70 countries
Major Potential GrowthMajor Potential Growth– Latin America Latin America – AsiaAsia– AfricaAfrica
Global Market
ONE YEAR FORECASTONE YEAR FORECAST Compass & Sodexho to continue with aggressive Compass & Sodexho to continue with aggressive
acquisition policiesacquisition policies Less sub-contracting from main twoLess sub-contracting from main two Little growth in Business & IndustryLittle growth in Business & Industry Growth in Catering for the Public sectorGrowth in Catering for the Public sector Economic slowdown = growth slowdownEconomic slowdown = growth slowdown Branded Outlet expansion (continued trend)Branded Outlet expansion (continued trend) Interest rates lowInterest rates low Tax increases likelyTax increases likely
Future Forecasts
FIVE YEAR FORECAST FIVE YEAR FORECAST Compass & Sodexho continue to growCompass & Sodexho continue to grow Less competitionLess competition Less sub contractingLess sub contracting Main growth in public sectorMain growth in public sector Economic slowdownEconomic slowdown Continued branded expansionContinued branded expansion Tax increasesTax increases Less small companies (recession) Less small companies (recession)
Future Forecasts
SOURCES OF INFORMATIONSOURCES 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
SOURCES OF INFORMATIONSOURCES 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