Contract caterers disagree on best strategy

A study into the state of the UK’s £3 billion-a-year contract catering market has revealed a sector divided on whether it makes sense to bundle catering with other outsourced services.

Many leading providers have combined catering with other FM services in response to market maturity, but customer opinion and company performance suggest this strategy is “not yet proven”, according to research from Apex Insight.

Apex said catering continues to converge with facilities management, as catering firms look to boost revenue per contract – the key industry value driver – while leading FM groups and integrated service providers increasingly include catering as part of their bundled service offer.

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Customers interviewed by Apex Insight were split between those who are keen on the idea of catering being part of a bundled service and those who see value in keeping it separate.

Some customers reported that it gave them cost savings and efficiency benefits, in particular from having a single point of contact for all services.

Others, however, argued that an integrated provider, especially one which 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 largest operators are Compass and Sodexo, both of which continue to expand their service offer to include a wide range of non-catering services and are now major international operations with presence in many countries.

However, the fastest-growing of the leading companies has been BaxterStorey. In contrast, it has retained its focus on UK catering, winning a series of high-profile contracts from incumbent competitors.

Apex added that in terms of the sector as a whole, the market’s prospects vary by sector. It said business and industry was mature, but cited “more potential” in other areas such as education, healthcare and local authorities.

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