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Big fish, small pond

01 January 2000
Big fish, small pond

The managing directors of the Republic of Ireland's three main contract caterers are like three big cats circling the same prey.

Gardner Merchant's Desmond Dorothy, Sutcliffe's Malcolm Devlin and Campbell Catering's Donal O'Brien may not all tell the same story when it comes to market share, but they agree their problems lie in the meagre size of the market and the staff shortage at all levels.

As in the UK market, contract catering is split into business and industry, education and healthcare. But the Irish education and health sectors are not developing at the same rate as the UK's because most contracts are run in-house or by the state.

In the education sector, only the universities, regional technical colleges, a few schools and some private institutions contract out their catering services.

Health service

The situation in the health service is more complex. When the Irish economy took a downturn about 10 years ago, national wage agreements were introduced between the Government, the employers and trade unions. These aimed to revive the economy and tackle an 18% unemployment rate by keeping wage levels moderate and preventing industrial action.

The Government guaranteed unions there would be no compulsory redundancies in the state sector, which includes hospital workers. So if catering was privatised there would be serious industrial relations implications.

Devlin says: "It's really bogged down with committees and red tape. I can't see it changing. It has got to come from the Daºl [Irish parliament]. I would love to make money from the health service because the market is so small and we're all grappling for our share."

Most hospital feeding contracts, except private hospitals, are self-operated and this makes the market even smaller. Dan Cronin, managing director, cafés and services for Campbell Bewley, argues: "Some of the protection is no longer needed because jobs are easily obtained outside the state sector. The private sector could look after it a lot better than the hospitals because it's not their core business."

With minimal business in the education and health service sectors, most contract caterers rely on business and industry. There are about 800 potential catering opportunities in all sectors in the republic but, unlike the UK, half of these are run in-house. It is a matter of persuading people to out-source their catering. Devlin adds: "The industry is going to struggle to improve if it doesn't concentrate on the self-operated market."

The biggest growth areas in the business and industry sector are technology and pharmaceuticals. This is lucrative business for Gardner Merchant, Sutcliffe and Campbell Bewley because it increases the amount of available contracts in the market. But it also reinforces their biggest problem - an acute staff shortage.

Contract caterers are already losing staff to each other because the market is controlled by so few players. And growth in the number of hotels in the republic means staff are spread even thinner.

Industries newly located in Ireland are a mixed blessing. They can mean big business for contract caterers - some 7,000 employees in the case of Intel - but they are drawing away graduates who might otherwise have chosen a career in hospitality. The republic has been affectionately termed the "silicon bog of Europe" because IT giants such as Motorola, Compaq and IBM have built factories there. These companies are also attracted by the Irish education system and the graduates it produces, says Breda Quigley, business development executive for Eurest in Ireland. "We have a highly-educated, IT-literate workforce. Half the population is under 30 and a third will go into third-level education. School-leavers are snapped up by new companies and colleges can't keep up with demand from the service industry," she says.

Desmond Dorothy adds: "We're in competition with our clients for operatives and line workers. There are 250,000 unemployed - 10% of the working population - but it's very difficult to get people."

Back to school

The big electronics companies are good at selling themselves to school and college leavers, but most caterers are trying to address the situation by forging relationships with schools and colleges.

Campbell Bewley has linked up with schools and takes teachers out to give them an insight into the industry so they can spread the word to students.

Sutcliffe's Malcolm Devlin has found that many people opting for hospitality qualifications switch to tourism. He is working with Irish training authority CERT to encourage more people into contract catering.

At Gardner Merchant, Desmond Dorothy is working closely with the Irish Business and Employers Confederation, which provides a personnel service, and looking into adapting positions to suit employees better. His catering managers are mostly female and aged 25 to 38, so he is looking into the possibility of offering them a package to allow them to balance work and family commitments. The firm also offers a £25 recruitment bounty to existing employees who introduce someone new to the company.

If contract catering companies continue to have difficulty attracting new people, they will have to fight harder to keep the staff they've got. Campbell Bewley has made a step in the right direction by giving away 5% of its shares to employees. Other companies may well have to follow suit.

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