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Land of giants: the changing face of the food service industry


When CH&Co merged with Concerto Group last December it was another in a growing list of business deals. And not just for the catering companies involved, but for UK foodservice. The sector has been through a period of extraordinary consolidation in recent years, with caterers of all sizes snapping up rival operators in a bid to bolster their offer and snag a bigger slice of the action.

It’s a trend that shows no signs of slowing either. Insight provider Plimsoll’s latest analy­sis of the leading 614 contract caterers in the UK found that 152 are in danger of failing, 56 are ripe for takeover and 204 are making a loss. These figures suggest there is still plenty of room for more mergers and acquisitions (M&As) in the coming months.

This is not the first wave of market consolidation to hit the sector by any means, and nor will it likely be the last. The Caterer was analysing the fallout of major deals some 20 years ago, including Sodexo’s merger with Gardner Merchant in 1995, Compass Group’s acquisition of Eurest in 1995, and Granada’s purchase of Sutcliffe in 1993, CCG in 1996, Shaw Catering in 1997 and Baxter & Platts in 1997.

But it is what happens after the deals are done that has evolved. It used to be common for a bought business to be swallowed up into the greater whole, with the personalities that helped make their enterprise so attractive to the purchaser in the first place jumping ship. A happy consequence of this entrepreneurial spirit was the creation of new catering companies, many of which, such as Artizian, Bartlett Mitchell and BaxterStorey, are still in operation.

Recent deals, however, have seen a much more concerted effort to integrate the bought business into the new parent company, as Stern explains: “Caterers have learned from past mistakes and they tend to leave any merged companies appearing as if they are trading separately. Just look at Lexington [bought by Elior in 2014] or the Good Eating Company [bought by Sodexo last year].

“There is definitely less negative fallout as a result. Key players tend to stay, maintaining relationships with key clients, then drift away gently over a period of time.”

“The market has needed shaking up for some time,” says Sam Hurst, chief executive of Grazing Food.

“We believe that, with our different service model, we are in a great place to take advantage of this.”
The new service model to which he is referring is a catering on demand online ordering system that the company’s business and industry brand Grazing Catering launched last year in what Hurst believes is an industry first.

The aim of the service to provide clients with an ad hoc workplace food offer without the need for contracts and on-site facilities. “The squeeze on space due to higher costs has seen ‘delivered-in’ businesses target companies that can no longer afford to dedicate vast amounts of square footage to kitchens.

“While there will always be a need for traditional catering service models, we are seeing an increase in requests from fast-growing companies who are looking for something a little more flexible. We believe our model sits between delivery and traditional catering services.”