Big boys under fire for reciprocal deals

Big contract caterers have been accused of using commercial muscle to take away contracts already won by smaller rivals.

Stuart Everson, managing director of Everson Hewett, said: "Four times in the past 12 months we have won the business fair and square and then reciprocal trading comes into play.

"The client gets a phone call from a larger caterer who basically says if they don't get the catering business they'll move their business away from the client," he said.

According to Everson, he had worked with a client to set up a café and was set to open, having hired the staff and manager, when the client called to cancel.

The reason given was that the client did some work for a larger contract caterer, which threatened to take that business away.

In that case Everson Hewett received £16,000 in compensation, but Everson believes the company has lost between £90,000 and £120,000 in revenue over the past year owing to reciprocal trading.

"I believe that with only two large players in the market now, this will happen more and more," he said. "The thing that annoys us is you get to the stage when you think it's finished and they can literally do a crayon drawing and they will get the contract."

Other independent caterers admit it has happened to them, but say it is just the cost of doing business.

"The big boys have advantages in their size and this is one of them," said William Baxter, executive chairman of BaxterSmith. "But clients shouldn't drag out the tender process if they know they are going to choose a specific caterer in the first place - I'd call that immoral."

Tim Cookson, chief executive of Senate Food Services, said he researches companies before tendering and steers clear of those where reciprocal trading could be an issue.

"I think 10 years ago it was worse when there were six or seven large companies," he said.

Of the two large players now in the UK market, Compass Granada was unavailable for comment, but Sodexho admitted reciprocal trading was a reality of doing business.

"Size is a double-edged sword - you may be large and impersonal but it gives you economies of scale. To some extent that is a fact of life," said Phil Hooper, sales and marketing director at Sodexho.

by Sara Guild

Source: Caterer & Hotelkeeper magazine, 24-30 August 2000