Catering market remains slow to pick up, says Compass

Contract catering giant Compass Group is predicting a 7% rise in like-for-like turnover this financial year despite continuing tough market conditions.

Chief executive Mike Bailey said: "2004 has started well, despite the fact that in many parts of the world the economic backdrop has remained challenging.

"Our new business growth has been strong and the pipeline for the year remains encouraging."

Like-for-like turnover growth for the financial year to the end of September is expected to be about 5% in the UK, at least 7% in North America, continental Europe and the rest of the world, and 7% for the group as a whole.

In the business & industry sector, Compass said there were some limited signs of a pick-up in clients' spending on catering - on special functions and parties, for example. But the trend was not consistent across different countries.

"Furthermore, there is little evidence of any real increase in the number of customers at clients' sites," the company added.

Compass expects growth to be driven by new business wins, coupled with a contract retention rate of 95%.

It will continue to spend money on small, "infill" acquisitions, but expects the amount spent this year to be below last year's £215m.

The fastest-growing sectors of the market continued to be healthcare, education, defence, offshore and remote-site business, Compass said.

New UK contract wins include:

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  A deal for Rail Gourmet UK to provide catering and logistics services for trains operated by First Great Western, which will turn over £6m a year and run until March 2006

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  A three-year contract for Scolarest to provide catering and hospitality services at Old Swinford Hospital School in Stourbridge, West Midlands, with turnover of £600,000 a year

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  A five-year deal with Perkins Engines at its site in Peterborough, Cambridgeshire, where Eurest will provide catering for 3,000 staff at a turnover of £850,000 a year

Overseas deals include a new one-year contract for Restaurant Associates for the 2005 US Open Golf Championship, which will turn over £2.7m.

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