In the last of our series on contract caterers, Jane Baker talks to Star and Catermasters - two companies experiencing a boom in business but with different ideas about what clients want from them.
Michael Thompson never intended to start a contract catering company. In 1995, he was happily ensconced managing the Old Parsonage hotel and Gee's restaurant in Oxford, when a colleague asked him to do a report on the catering in a local language school. He was subsequently persuaded to take on the contract, employed a manager to run it, and in the first year turned in a profit of £24,000.
"This was a catalyst for doing it full-time, so I started Star Catering and left my job in 1996," says Thompson, who admits that at the time he knew little about contract catering. "I just fell into it - it was a very steep learning curve."
His initial contacts in the industry were in the education sector, and this is where the early contracts were won. Star now has 14 schools and colleges in Hampshire, Buckinghamshire and Worcestershire.
In 1997 Thompson was joined by finance director Martin Evans, and in 2000 by director Julian Boulter - the three are now joint owners of Star.
Two years ago a concentrated marketing and sales campaign was launched, resulting in a doubling of turnover for 2000 and 2001. Turnover is also estimated to double this year. "This is a controlled explosion and a concerted effort to go down the business and industry road, which we had not penetrated enough," says Thompson. "Money was invested in telesales, sales people and mail-shots, and we appointed Marilyn Goodwin as director of business development."
The result was 13 new contracts in the B&I sector in 2001, including mobile phone giant Ericsson's new European headquarters in Basingstoke, Hampshire, and the seven-day operation at the Singlepoint Call Centre in Stoke-on-Trent, Staffordshire.
Unlike many smaller contractors, Thompson does not see food on the plate as of sole importance. "The most crucial element of our offer is service," he says. "When clients outsource catering, they are looking for a hassle-free existence with favourable feedback from staff. Food has got to be good, but it's only one element, along with well-trained staff and financial controls. If all we did was supply fantastic food, but it was double the budget, we wouldn't be providing the service the client wants. Food doesn't have to be lesser quality, just right for that company. In our experience, it could be langoustines for one client and fish and chips for another."
Star is not the cheapest contractor and usually ends up in the middle range at the tendering stage, and Thompson is comfortable with this. "If the client wants a catering service and is prepared to pay for it, and if we can provide and exceed his expectations, we will," he says. "We're not just targeting headquarters. If we see a business opportunity, we will consider it."
Having achieved 38% growth in 2001 and with a further 35% predicted for this year, Catermasters is about to launch a new corporate identity and move to bigger offices. Not bad for a company whose first-year turnover of £150,000, 12 years ago, equals its current weekly turnover.
"It was very tough to start with," admits Nigel Johnson who, with Richard Moody, founded the company in 1990, funding it through security on their homes to allow overdraft facilities of as much as £40,000. "It was the height of the recession and the banks wouldn't touch us. Now they take us out to lunch."
Moody had worked for Sodexho and then ran his own restaurant in Wallingford, Oxfordshire, for seven years before deciding that the unsocial hours did not suit family life. So he joined a Midlands-based contractor, where he met Johnson. When their employer was taken over by a larger organisation, they felt that the new style and aims did not suit their philosophy, so they started Catermasters.
Moody worked for a catering agency for a year to bring in some money while Johnson did the selling. "With only a windowless, 6ft by 6ft office and one car between us," he remembers, "I often found myself making sales appointments while travelling on buses."
Business was slow for the first five months and then BP Oil, in Surrey, offered them a small contract. "It was a risky thing for the client to do, but I think he felt we couldn't fail," says Johnson. "Our raw enthusiasm and passion came through." A second contract, with Remploy in Coventry, followed shortly, and by the end of the year they had four contracts. "The lean times have made us sensible," says Moody, "and we always maintain a healthy balance and control growth so that we don't overstretch ourselves. We're aiming to have 80 to 90 contracts by 2005."
With a base in Leamington Spa, Warwickshire, the initial decision was to limit the operating area around the M40 corridor, but with that first contract in Walton-on-Thames and the second in Coventry, these plans were swiftly overturned.
The company targets only business and industry clients, avoiding the seven-day healthcare market and the cash-strapped education sector. "We've a lot of craft-skilled people who want to work to larger budgets," says Moody. "We're not the cheapest, but we're selective in what we tender for. If the client is looking only at the bottom line, we're not likely to win that business."
Moody sees retaining staff long-term as key to continued success in retaining business. "We operate a succession plan to promote from within, and offer all employees training," he says. "We are hoping to get Investors in People accreditation this August. We're a family-orientated company with no airs and graces and an approachable, comfortable environment for people to work in."
On the record
What is your view of independent contractors?
"The industry is best served by independent caterers who are entrepreneurs and have passion. We always listen to the client and often reach the shortlist because we're not offering standard policies on everything, like some of the larger contractors. We sit down and become part of their team and make suggestions to them. This is one of the reasons why we are successful."
How do you recruit staff?
"There's no easy answer to recruiting and retaining staff, but we do go ‘star spotting' for people we might think are ‘stars', such as receptionists and waiters - people with the ingrained service ethic. If you fill an organisation with these people, you will do well."
What is the most important element of your service?
"Food on the plate. If this is right, people will use the facility and enable the budget to work. One example is Oxford University Press, which we won in 2000 with a bid that was the most expensive, but, within three months of taking over, customer numbers and sales rose by 40%."
Where do you get your business?
"Nearly 40% comes from drop-out from the big contractors, the main reason being that the client and the staff want to be visited. One new client said his previous company's operations manager hadn't visited for a year. Referrals are also important in keeping and winning business."
Star Catering Management
13a Station Road, Marlow, Buckinghamshire SL7 1NG
Tel: 01628 488244
Web site: www.starcatering.co.uk
Founded: 1995 by managing director Michael Thompson
Initial funding: £3,000 of Thompson's own money
Catermasters Contract Catering
5a Clarendon Place, Leamington Spa, Warwickshire CV32 5QL
Tel: 01926 314509
Web site: www.catermasters.co.uk
Founded: 1990 by Nigel Johnson and Richard Moody, joint managing directors
Initial funding: security on their houses for an overdraft up to £40,000