After many years of unbroken and strong growth, the UK contract catering industry has endured a difficult time during the past two or three years, with negligible growth and a wave of adverse publicity for certain sectors of the market. This is despite the fact that in some areas of the business, huge advances have been made in terms of the quality of the catering offer and also the way in which this is marketed to its target consumer, whether this is an employee or a pupil.

This report considers the hypothesis that by steadily improving quality to as good as, or better than consumers can find on the high street, contract caterers will improve take-up of the services they offer. To achieve this, they need to bring their menus more in line with the expectations of today’s consumer in terms of healthy ingredients and environmentally friendly packaging and product sourcing.


Table of contents:


Issues in the Market
Definitions

Abbreviations

Market in Brief
Tough times for contract caterers…
…resulting in stagnant revenue
Figure 1: Trends in the UK contract catering market size, 2001-06
Although the business and industry sector is thriving…
…education has been badly affected…
…resulting in some contracts no longer being viable
Expansion for both Compass and Sodexho
Looking towards single contractors
Consumers pro making kids eat more healthily…
…and educating both children and parents

Internal Market Environment
Staff shortages - a constant headache
The National Minimum Wage - putting pressure on costs
Outsourcing - a growing market
Figure 2: Support services provided by contract caterers, 2005
Competition from the high street
Prevalence of in-house branding increases
Figure 3: Trends in branding of contract catering outlets, 2001-05
The growth of home working
The impact of snacking and work pressures
Healthy eating
School meals and restrictions on vending machines
Environmental and ethical factors
Rising energy costs

Broader Market Environment
A little more cautious consumer spending
Figure 4: Trends in personal disposable income and consumer expenditure, 2001-11
Sit-down versus grab ‘n’ go
Figure 5: Trends in the UK population by age, 2001-11
More sophisticated tastes
Figure 6: Trends in the adult population* by socio-economic group, 2001-11

Competitive Context
Figure 7: Average weekly household expenditure on meals, snacks and non-alcoholic drinks, by category, 1999/00 to 2004/05

Strengths and Weaknesses in the Market
Strengths
Weaknesses

Market Size and Forecast
Market performance
Figure 8: UK contract catering market size trends, 2001-11
Figure 9: UK contract catering market by outlets and number of meals served, 2001-06
Present market performance
Future market performance

Factors incorporated in the forecast

Segment Performance
By meals served
Figure 10: UK contract catering market by segment, by number of meals served, 2001-05
By number of outlets
Figure 11: UK contract catering market by segment, by number of outlets, 2001-05
By contract type
Figure 12: UK contract catering outlet numbers by contract type, 2001-05
Business and industry
Figure 13: Trends in the prison population, 2001-06
Education
Figure 14: Trends in school numbers, pupil count and pupils per school, 2001-06
Healthcare
Figure 15: Trends in the number of available hospital beds, 2000/01-2005/06
Public catering
Defence
Figure 16: Trends in the strength of regular UK armed forces personnel, 2002-06

Companies and Products
Industry structure
Figure 17: Number of UK VAT-based companies engaged in the operation of canteens and catering services, by size of turnover, 2001-06
Figure 18: UK contract catering industry income and expenditure trends, 2001-05
Company profiles
Aramark
Figure 19: Financial performance of Aramark UK Ltd, 2004 and 2005
BaxterStorey Ltd
Figure 20: Financial performance of BaxterStorey Ltd, 2004 and 2005
Charlton House Catering Services Ltd
Figure 21: Financial performance of Charlton House Catering Services Ltd, 2004 and 2005
Compass Group plc
Figure 22: Financial performance of Compass Group plc, 2004 and 2005
Elior SCA
Figure 23: Financial performance of Avenance plc, 2004 and 2005
Figure 24: Financial performance of Digby Trout Restaurants Ltd, 2004 and 2005
Figure 25: Financial performance of Eliance Restaurants Ltd, 2004 and 2005
Sodexho Alliance
Figure 26: Financial performance of Sodexho Alliance, 2005 and 2006
Figure 27: Sodexho Alliance UK and Ireland Food & Facilities Management Services revenues by segment, 2005 and 2006
Other players

Improving the Food Offer
Improvements in contract catering standards…
…despite the negative furore surrounding state school dinners
Contract caterers competing as much with high street as with sector rivals
Clients and consumers demanding far higher quality offer
How the trend for healthy eating is affecting everyday contract catering provision

Developing the Products
How the trend towards snacking and grab ‘n’ go is affecting contract catering provision
How environmental factors are influencing the services caterers provide
How advances in technology are affecting the industry
How important branding is in contract catering

Management Concerns
Pressure on margins more intense than ever before
Legislation and red tape
Shortage of quality personnel
Client/contract caterer relationship improves
How important support services are to the contract catering industry
Whether small and medium-sized contract catering businesses are driving innovation and growth
How the market will change over the next few years

School Meals and Lunchtime Eating Habits
Figure 28: Children’s lunchtime eating habits, August 2006

School meals and lunchtime eating habits - detailed demographics
Figure 29: Children’s lunchtime eating habits, by age, socio-economic group, marital and working status, August 2006
Figure 30: Children’s lunchtime eating habits, by region, ACORN category, age of own children, gross household income, household size and car usage, August 2006
Figure 31: Children’s lunchtime eating habits, by newspaper readership, Internet usage, commercial TV viewing and supermarket usage, August 2006

What Adults Think About School Meals
Figure 32: Attitudes towards school meals, September/October 2006

What adults think about school meals: detailed demographics
Most popular attitudes towards school meals
Figure 33: Most popular attitudes towards school meals, by gender, socio-economic group and marital status, September/October 2006
Figure 34: Most popular attitudes towards school meals, by detailed lifestage, September/October 2006
Figure 35: Most popular attitudes towards school meals, by region, ACORN category, working status, age of children and tenure, September/October 2006
Figure 36: Most popular attitudes towards school meals, by media usage, supermarket used and commercial TV viewing, September/October 2006
Next most popular attitudes towards school meals
Figure 37: Next most popular attitudes towards school meals, by gender, age, socio-economic group and marital status, September/October 2006
Figure 38: Next most popular attitudes towards school meals, by detailed lifestage, September/October 2006
Figure 39: Next most popular attitudes towards school meals, by region, ACORN category, working status, age of children and tenure, September/October 2006
Figure 40: Next most popular attitudes towards school meals, by media usage, supermarket used and commercial TV viewing, September/October 2006