Checks and balances

In the second part of our series on small independent contractors, Jane Baker reports on two successful companies with different approaches. One targets directors' dining rooms in the City of London, the other mixes and matches business across the country.

Not many companies are prepared to operate a system whereby fees are docked if performance does not match expectations. In-House Catering, however, does just this. With a turnover of £3.2m from 28 contracts, it provides each of its clients with a quarterly summary sheet listing 10 facets of its service. Each represents 10% of the management fee, to be rated on a five-point scale ranging from "excellent" to "poor". If the score for any facet of service is at the bottom of the scale, the fees could be reduced by as much as 10%. So far, however, this has not happened.

"It keeps us on our toes. We don't want room for complacency," says operations director Mark Herman. "It also gives us a structured approach to reviewing the catering with the client on a quarterly basis."

The company was founded in 1995 by Herman and Tim Gamblen, who both worked for Cityline before it was merged with Leiths and ended up as part of Compass. They felt they wanted to build on the small-company strengths that had made Cityline successful. They were joined in 1997 by chairman Philip Redfern, a former director of Cityline. Operating within London and the City, In-House Catering has found a niche providing catering services to directors' dining rooms and conference centres.

"Private dining is a business meeting, not a leisure experience," says Herman, "but we're still measured directly by the quality of food in an outside restaurant. We felt this was our strength, rather than staff feeding."

The business emphasis is heavily on the food side. Chefs write their own menus and buy the ingredients they want, as long as they stay within budgets and use nominated suppliers. Last year, Ian McAndrew, a consultant chef and author of four cookery books, was brought in to work with chefs to help develop their skills and expertise.

In-House Catering's expansion to date has been slow but steady. Now, however, it wants to increase its rate of growth in a controlled manner, so that it doubles in size within five years. "The target for the next 12 months is seven to 10 new contracts, but we don't want to grow so fast that we can't deliver our promises," says Tim Hackshaw, who joined the firm as business development director in 2000. "Clients have easy access to our directors, which shortens the decision-making process, and we don't want to lose sight of this. It's one of the main differences between us and the large contractors."

One area that In-House wants to develop is conference business. It currently manages the catering and hotel services for the Merchant Navy Welfare Board in Lancaster Gate. When it took over the contract in 1999, In-House boosted the profit from a three-year total of £18,000 to a massive £130,000 in the first year, rising to £140,000 the next.

In-House also does the catering at the Royal Aeronautical Society, off Park Lane, and the Rutherford Conference Centre in Portland Place, part of the Institute of Physics, where the company recently invested £50,000 in upgrading the kitchens and the dining room. "The previous caterers bought in food from another site and reheated it," says Hackshaw, "but the client wanted four-star facilities, which he now has. The key thing about us is that we provide what the clients want. There is no prescriptive formula."

Perfect balance
With a mixture of schools, retail outlets and staff feeding for blue-chip companies on its client list, balance is the philosophy of the Catering Partnership. It seems to be working - the company now turns over £7m a year.

"We decided never to put all our eggs in one basket," says Harry Gadsden, who founded the company in 1987 with Arthur Olding. "I'd worked for several contractors, and three times they were taken over. When Arthur suggested we start our own company, I asked myself, ‘Can I live with myself if I turn this down?'."

They started operations from Gadsden's dining room, until faced with the embarrassment of negotiating with two rival suppliers around the same table. They then moved to offices in Lutterworth, Leicestershire.

Gadsden admits that they had a lucky start with their first contract, which they held for 12 years until the premises closed. They secured the deal after the site's previous catering manager walked out. "He walked out on Friday and we were serving meals by the following Monday," Gadsden says. "We didn't even know what we were going to earn. The client had told us only two days earlier that he wasn't looking to change caterers."

That first year's turnover was a healthy £500,000. But, from the beginning, Gadsden decided to spread the business across several sectors. The company runs catering at 12 schools, both public and state, although Gadsden won't take on schools that demand terms that are "potentially suicidal". It also has contracts with two retail outlets, Millets Leisurewear in Chester and the New Art Gallery in Walsall, the latter of which has conference facilities. Among its business and industry clients are Asda, Salvesen, Volvo and a new five-year contract with Cussons UK for three multitenanted sites.

Olding left the company in 1998, and two years later Gadsden moved the Catering Partnership to new offices in Blaby, Leicestershire. Business has increased dramatically since. "We have a proactive personnel and training department, offering innovative packages for staff, involving laptops, open learning, colleges and NVQs," says Gadsden. He shows his interest in his staff by signing a birthday card for each one, and runs monthly staff award schemes. The company likes to groom its own management and recently appointed its first operations director, Tony Coombs, who started 13 years ago as a relief manager.

"Having fun at work is important," says Gadsden. "I enjoy my job, and I want the staff to do so. If I care about them and support them, they will serve the customer well."

On the record

Mark Herman

What are you doing about attracting staff? "We were credited with Investors in People in January 2001 because we felt strongly that, with the skills shortages in the industry, it was important to train staff, add to their skills and reduce recruitment costs. We need to grow in order to offer opportunities to staff and make a profit to reinvest back into the company."

What is your biggest challenge?
"Retaining business. We have 100% retention and, to maintain this, we must constantly improve standards, and motivate and inspire the staff to learn."

Harry Gadsden

What do you consider is your unique selling point? "We're very proactive with marketing. We take a unique approach and target each site manager to produce a marketing plan every six months. We're very supportive of this and cross-fertilise ideas, which adds interest, raises revenue and markets our services."

Why have you been successful?
"Our name says it all. The word ‘partnership' is reflected in our relations with our staff and clients. We major in communications by not losing touch with either. An area manager spends a whole day every two weeks in a unit. They are there to see hygiene practices, food preparation, how staff dress and whether they deal with the customer in the right way. We can't do this by dashing in and out."

In-House Catering

Suite 78-79, 65 London Wall, London EC2M 5TU
Tel: 020 7628 2218www.in-housecatering.co.uk
Founded: in 1995 by operations director Mark Herman and financial director Tim Gamblen
Initial funding: £50,000 supplied by founders and then-chairman Gary Hall
Turnover: £3.2m
Contracts: 28
Staff: 115

Catering Partnership

33 Leicester Road, Blaby, Leicestershire LE8 4GU
Tel: 01162 642001www.catering-partnership.co.uk
Turnover: £7m
Contracts: 58
Staff: 380
Founded: 1987 by Harry Gadsden and Arthur Olding
Initial funding: total of £6,000 redundancy money from the founders