Canteen culture

Most contract caterers agree that consultant Catercheck's recent report on business and industry catering paints a broadly accurate picture. It is a familiar and challenging world in which clients want to reduce space and subsidies by installing kiosk-style retail units and serving lighter, grab-and-go meals.

Of course, the declining number of workers choosing a hot, sit-down meal at lunchtime simply reflects changes in eating habits and the increasing time demands of the working day. But these changes don't necessarily mean fewer people are using catering facilities.

Nigel Forbes, business and industry executive director at Sodexho, points out that on-site delis, coffee bars and retail shops that are open all day probably account for more transactions than a traditional staff canteen.

"There is pressure on space and subsidies. However, it doesn't necessarily follow that clients don't see catering as an important staff benefit," says Forbes.

In fact, some companies are willing to go as far as giving their employees free meals and drinks at the point of sale.

Surrey-based caterer Bartlett Mitchell has two such clients. Co-founder Wendy Bartlett explains that these are small, start-up telecoms and IT companies that "want to create a sense of belonging and are taking the touchy-feely approach".

She has noticed since 11 September 2001 a need for companies to demonstrate that they care; and food can be used by a client as a relatively inexpensive way to emphasise its caring culture.

This can take the form of "sweeteners", such as free fruit, free coffee from a vending machine or - better still - a high-quality caffeine fix from a bean-to-cup device.

Reducing subsidies
Bartlett reckons that catering has moved on. "It is not just about the food at lunchtime any more." Admittedly, clients are reducing subsidies, but in many cases this is to hone the service. To offset costs, one of the above-mentioned clients operates its restaurant on three days of the week and uses the space as a meeting area and library at other times.

Restaurants At Work, an independent caterer with annual sales of £6m, also has a client that serves free meals. It is an IT firm with 200 employees based at the Cambridge Science Park. Restaurants At Work managing director David Jenkinson advised the client against the policy, but it stuck to its guns. "In the future things may change, and it'll be a hassle to get them to pay," he warns.

Jenkinson believes business and industry caterers should play a greater role in communicating the health and productivity benefits that clients can expect from a well fed and watered workforce. Experts recommend breaks every 40 minutes, and he thinks caterers can capitalise on the message that workers need regular breaks.

Warming to the theme, he insists: "We've had an unspoken recession and, sadly, staff catering is seen as a cost instead of an investment. In terms of staff benefits - pensions, share options, medical insurance, dental care, subsidised travel and fitness centres - catering represents bloody good value for money."

It won't be a surprise to learn that Catercheck's survey found beverage break-out areas, fresh deli-bar services and take-away services all went down well with clients.

The survey also found that businesses expect even tighter control of costs in the future. The proportion of contracts operating fixed annual subsidies has risen from 32% in 1993 to 82% this year. Of the respondents who proposed to make changes to their catering policy (87%), nearly half wanted to introduce nil subsidy in the future.

Jenkinson is among those who believe clients cannot have it both ways - they can't have a quality service with minimal investment. He believes zero-cost catering is achievable, and desirable, only at sites with 2,000-plus personnel paying high-street prices. "And there's a lot of people who won't spend more than £2.50 a day," he adds.

He reckons a perception has been created that anyone can achieve zero costs, and this has been perpetrated largely by contractors with US management who tend to think that models from the USA can be replicated in the UK. But he adds that this is simplistic and doesn't allow for lower food costs and far higher consumer incomes in the USA.

Catercheck's survey concludes that contractors cannot continue to reduce costs by raising prices and cutting staff. The two most widespread options for maintaining or improving margins have been to branch out into managing other facilities or to bring in brands that command higher prices.

What has certainly raised a few contractors' eyebrows is the negative response to brands in staff restaurants, despite them being hailed as an effective means of guaranteeing a safe, consistent product that can command higher tariffs and customer loyalty.

Nearly two-thirds of clients were dissatisfied with both high-street and caterers' own brands, which they felt contributed to "menu fatigue" and price hikes.

According to Forbes, Sodexho's experience contradicts Catercheck's findings. "In the UK, Sodexho has brands in more than 1,000 locations. Each brand has increased patronage, increased sales volume and customer satisfaction and reduced client's catering subsidies. Branding will remain an important focus at Sodexho."

However, Adrian Stokes, of Adrian Stokes Associates, is not surprised. He believes that some staff restaurants offer an inferior version of the high-street product, despite carrying the same branding. Franchise fees represent another cut in margin, which can mean that training suffers after the initial launch of the branded outlet.

Choice of brands Clearly, success depends on the size of sites and what variety of services they can accommodate. Chris Brown, food service consultancy director at Turpin Smale, says you need a choice of brands when you have a captive market. "Otherwise, it's easy to see the danger of brand fatigue. How would you feel if you had the same meal every day?"

Most large contractors now offer other services to help them maintain margins, such as post room management, messenger services, staff fitness suites and security or concierge personnel. But this strategy also carries risks, according to some. Ruston Toms, co-founder of Blue Apple, an independent caterer with annual sales of about £2m, says: "In my opinion, this makes them a jack of all trades and a master of none, vulnerable to the smaller, specialist independents who can focus solely on the food and service."

Catercheck's survey concludes that shrinking markets and a reduction in subsidy are extremely difficult to manage. But there are a number of caterers who are succeeding in tailoring their services to the customer's requirement and delivering a nil-cost or low-cost solution.

The most successful operations are those located within business parks and other out-of-town locations, where competition is either weak or non-existent. Given the cost of city centre office space, such sites may well multiply in the future. Parts of the IT and telecoms industries are showing signs of recovery, and a will to differentiate themselves as preferred employers will see them using catering as a key way of attracting new staff.

Jenkinson believes any talk of the death of the staff restaurant is overstated and sends out the wrong message to an industry that needs to attract quality staff. "As a performing sector it's been remarkably resilient since its origin in the post-war period," he says, pointing out that a demand for hot, plated meals remains in about 40% of sites, particularly in manufacturing and places where people work shifts.

He believes the evolution of the staff restaurant to accommodate healthier and lighter-eating habits on tight budgets presents challenges - but also considerable opportunities. "The industry needs to talk itself up. The importance and benefits of a good-quality staff catering service demands much greater flag waving," he adds.

What the Catercheck survey said

Consultant Catercheck's survey of catering policies, performance and trends found:

• Three out of five clients reported a drop in the number of diners compared with the boom year of 1993.
• All had increased tariffs and reduced overall subsidies and staff numbers.
• The percentage operating fixed subsidies had risen to 82% from 21% in 1993.
• Nearly 90% said they were likely to change their catering policy in the next three years. Of these 56% want to reduce the subsidy and 44% want to achieve nil subsidy.
• 51% of respondents plan to introduce cashless payment systems in the next three years.
• 35% plan to introduce foodcourt facilities.
• 61% were not satisfied with high-street brands or caterers' own brands.
• 50% were satisfied - plus 4% very satisfied - with lighter, healthier options.
• 69% were not satisfied with retail shops.
• 63% were very satisfied - plus 26% satisfied - with deli-bars.
• 83% were satisfied - plus 4% very satisfied - with beverage break-out areas.
• 53% were satisfied - plus 34% very satisfied - with take-away services.
• Menu variety, at 32%, was the factor most likely to increase customer satisfaction.

The survey was based on the thoughts and opinions of 80 client organisations that use contract caterers to provide food services. The clients came from the finance, public utility, IT, car manufacturing, food manufacturing and media industries. The size of sites ranged from 2,500-plus personnel, accounting for 44%, to those with fewer than 500 people, representing 12% of the survey.

The full survey can be ordered online at www.catercheck.com - half of the £20 purchase price will be donated to the industry charity, Hospitality Action.