Boom times are back

Barely a day goes by here at the Catering Insight newsdesk when we haven’t received some kind of press release or tip off about a particular supplier, distributor or group that has achieved record financial results.

Sales are up, turnover has increased, huge contracts have been inked – the list goes on and on.

All of this is incredibly positive news and marks a major turnaround for a sector that even a year or two ago was still suffering from the after-effects of the recession. Distributors were folding, web-based equipment dealers were sucking business away from bricks to clicks, and margins were slashed to unsustainable levels.

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But with the eating out sector on the crest of a wave, more potential work from a possibly widened free school meals programme (depending on what the new government decides) and a willingness by end-users to go ahead with projects that they may have previously put on hold, it seems all the market signs are pointing in the right direction.

Nothing illustrated the feel-good factor more than the statistics coming out of buying group Cedabond’s AGM during this year’s CEDA Conference – which in itself had record attendance figures. In 2014 a record-breaking £35.4m turnover was posted, which included a record remittance by all members, of over £4.7m, and a record turnover by all suppliers, of nearly £4.3m.

Every quarter’s results were up by between 22 and 27% on a like for like basis compared to the same periods last year. This year has started in the same vein, with a 26% like for like increase – indeed this quarter has been the best yet posted by Cedabond, with March the second best ever month, only beaten by last August.

With over £3m identified last year in the buying group’s payment system, Cedabond chair, Phil Martin said: “Members’ cashflow is being affected by the volume of business going through, so we are looking to provide an extended credit service.” This would mean Cedabond would effectively pay suppliers within 30 days, and then members pay the group within 60-90 days. However, the final details are still being worked out.

That’s not to say everything is rosy in the catering equipment garden. There are still clouds on the horizon thanks to the Competition and Markets Authority’s (CMA) investigation into what amounts to accusations of equipment ‘price fixing’. Industry insiders have reported that some distributors have been railroaded into co-operating with this government department, even though they are apparently not ‘officially’ under investigation.

Catering Insight has learned that these distributors were verbally advised that if they didn’t jump onboard, the CMA would ‘take a look’ at their businesses.

Nevertheless, the catering equipment industry shouldn’t let this mar what is shaping up to be a very good year. Let’s just hope the bubble doesn’t burst any time soon.
 

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