March 27, 2002—Turnover in the contract catering market rose to 3.51bn last year as caterers invested more in contracts and were more prepared to take risks.
Contract catering companies invested 130m in their clients premises last year, according to the latest annual contract catering survey, published by the British Hospitality Association and sponsored by the Caterplan Division of Unilever Bestfoods. Investment in Private Finance Initiative (PFI) projects amounted to a further 175m.
Of the 2,200 contracts where contractors invested in clients premises, over 60% were dependent on that investment being made. Eighty contracts attracted over 500,000.
Linda Halliday, chair of the BHAs Food and Service Management Forum, says the surveys findings are indicative of a new approach by caterers: “Contractors have traditionally been risk-averse but they are now becoming confirmed risk-takers.
“Even independent contract catering companies are finding that new approaches, new ideas and new menus—some of which are dependent on investment in new catering facilities—are now expected by clients and have to be provided by the contractor if contracts are to be gained and retained,” said Halliday.
The more commercial environment in which contractors now have to operate is reflected in the sharp rise of the number of branded outlets. In addition, the continuing decline in the number of risk-free cost-plus contracts (in which all costs plus a management fee are passed on to the client) is accompanied by the rising number of contracts in which there is an element of risk.
“Increasing commercialization has become the dominant theme in contract catering today,” says Linda Halliday. “Contractors have adopted—and have certainly adapted—the commercial instincts of the High Street caterer.”
One way in which contractors are containing costs is to employ more part-time workers (up 18% last year) and fewer full-timers (down 4%). Nevertheless, payroll costs rose by 8.1%—a reflection, says the survey, of skilled staff shortages and the impact of the national minimum wage.
“The shortage of skilled staff, the enhancement of the National Minimum Wage and the cost of complying with government employment legislation continue to put pressure on labor costs,” commented Halliday.
—Richard Byatt
Reprinted with permission; copyright 2002 i-FM
