Contract sector will see steady growth
Contract caterers can expect steady business growth for the next four years, according to the latest business-to-business market research.
Market and Business Development, a Manchester-based research consultancy, predicted a constant year-on-year growth in sales of 3-4% for the next four years. It expected sales to have grown by 15% by 2008.
This follows expected growth of 3% in 2003 - far lower than the 14% achieved in 1999, but at least the downturn seems to have been stemmed.
Despite a fall in growth rate, the contract catering market in 2003 was estimated to be worth £3.73b, about £720m more than in 1999. An analyst for the researcher said: "We expect steady growth of 3-4% a year unless something dramatic happens in the industry."
Sector-by-sector analysis forecast that business and industry sales would grow by 16% between 2004 and 2008. According to the report, growth areas in this sector would be food provision for small and medium-sized firms and science and business parks.
William Baxter, executive chairman of contract caterer BaxterSmith, commented that the past few years had seen phenomenal growth from smaller independent firms. "The market is very competitive, and everyone has had to up their game."
He added that more small companies than before were given the chance to tender for large jobs. "It is no longer good enough to have your USP as being a small company - you have to find a new twist and a different script."
The education sector is expected to grow by 15% by 2008, with Government initiatives to improve catering playing a big part. There would also be further opportunities in universities and colleges.
Healthcare was anticipated to grow by 14% in the same period, again benefiting from Government investment and the Private Finance Initiative. This scheme will see another 30 hospitals built in the next few years at a cost of £2.5b, offering more long-term contracts to catering firms.
Tony Heddon, business development director for Medirest, the Compass subsidiary, said he expected the sector to grow further. "We have an ageing population and a limited public purse. There will be more private-public partnerships."
Iain Anderson, managing director of Sodexho Healthcare, agreed: "The sector has tremendous potential and huge opportunities."
Despite Government scale-backs in defence spending and reduced personnel, other areas of the public sector were showing potential, said the report. It pointed to the 45% growth in monthly average prison populations between 1999 and 2001 and expansion in public-sector staff, particularly at the Inland Revenue, where 13,000 extra staff have been recruited.
The report also predicted increased catering opportunities at transport terminals, shopping centres and special events. This sector would grow by 11% by 2008, it predicted.
UKcontract catering market
Year Sales Change
1999 £3.01b +14%
2000 £3.27b +8%
2001 £3.51b +8%
2002 £3.62b +3%
2003 £3.73b +3%
Source: MBD
