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"the handcuffs are off," says David Bate, managing director of the new Quadrant. "Now we're a joint venture we can trade actively in the open market, not just in the Post Office and public sector."
At the end of March, Granada Food Services bought a 49% share of Quadrant from the Post Office in a deal reportedly worth in excess of £20m. As the catering organisation for the Post Office, Quadrant operates in 450 sites, most of which are for Post Office companies. Just 26 locations are for external clients - all public sector organisations - because the DTI restricted the old Quadrant's operations in the market.
Bate is convinced that Quadrant will become a force to be reckoned with, pointing out that it is the fifth-largest contract caterer in the UK in terms of sites, and the seventh-largest in terms of turnover - £70m. He is aiming for £80m next year and £110m in five years' time.
"A lot of people's view from the outside", he says, "is that Quadrant is in the Dark Ages and hasn't moved very far. But in reality, it has been going from strength to strength. It's been quite commercial and hasn't been starved of capital. I see it as a sleeping giant."
Already, the company's sales team has been beefed up. Old Quadrant's sales department had a single sales manager; now the company has a sales director and general manager of sales, plus two telesales staff and a secretary.
Bate was previously managing director of the south-west region of Sutcliffe, a subsidiary of Granada. However, he is keen to dispel any idea that Granada is now running the show. "I think of myself through and through as Quadrant," he says, adding that the other four ex-Sutcliffe managers who have been brought in feel the same.
Frank Whittaker, Granada's group sales and marketing director, reinforces this. "We devolve power and responsibility for profits to the individual managing director," he says.
As a joint-venture company, Quadrant is not a Granada subsidiary as such. Moreover, it will now be competing with Sutcliffe for the same business. Whittaker points out that this approach is not as contrary as it sounds. "Over the past three or four years," he says, "we have acquired a number of smaller companies - including Baxter & Platts, Shaws, Fairfield and Capitol - which we have kept separate. They sell in competition with Sutcliffe, but we don't see them as eroding Sutcliffe's business. They have their own cultures and their own strengths, so enable us to attack the market by providing a number of alternatives."
Bate's plan is to retain the best of the existing Quadrant culture and way of doing business while "cherry picking" from Granada. There are three main fields where Quadrant is especially being brought up to speed by Granada expertise - IT, commercial areas such as marketing and merchandising, and branding.
More sophisticated
Quadrant had developed its own Magenta IT system, which was used in 110 sites. It is being replaced with Granada's more sophisticated Lynx system, to be installed on more than 200 sites.
As for marketing and merchandising, Bate admits that Quadrant has been weak in this area. He wants to introduce more commercial measurement and to improve merchandising messages. As a result, the commercial trading managers, operations managers and general managers are being put through Granada training courses.
The third area of change relates to branding. "This was one of the reasons why the Post Office sought a partner," explains Bate.
Depending on the individual sites, Granada brands will be introduced, among them Deli Bars, Zefferelli's pizza and pasta, Chef's Theatre, Jackets No Ties baked potatoes and Essentials shops. "In addition, we want to develop a couple of brands that are exclusive to Quadrant," explains Bate. "For instance, we have quite a lot of breakfast bars. And we're looking at coffee shop themes."
However, he says the traditional fare offered in the staff restaurants will stay. Also unlikely to change is the level of pricing offered to the 194,000 Post Office workers. The various Post Office companies provide a subsidy of more than £30m annually, and the joint-venture company has agreed on a capping formula - the current subsidy, plus inflation, less 3.5% each year.
The sites themselves are in "various" states of repair, though some are very modern. In the past, the Post Office has spent £3m a year on refurbishment, but the new Quadrant has a guaranteed £5.5m a year for the next five years. In addition, the Post Office itself is investing in further new buildings and refurbishment.
Before the announcement of the joint venture with Granada, there was considerable concern among the workforce. Quadrant's staff were threatening to strike until it was agreed that any who were made redundant would be found jobs elsewhere in the Post Office. There were also canteen boycotts by customers. However, Bate says staff and union relationships have been very co-operative since the new arrangement started.
New status
Around 70 staff at the Swindon headquarters have been made redundant, mainly in the accounting, payroll and purchasing departments. Currently, headquarters is in a Post Office building in Swindon, but Quadrant will soon be moving to its own building in the town - a change which emphasises its new status.
The remaining 2,800 staff have retained the same wages and conditions and have been given some Granada benefits, such as a company discounts booklet. Bate adds: "There have been no redundancies at all on the sites because our intention is to increase the amount of business."
He believes Quadrant has some considerable strengths in its culture and business techniques that will help it grow. For example, it has developed highly professional techniques for researching its market - using NOP, rather than in-house questionnaires - which could be applied to non-Post Office customers. Similarly, it is used to the discipline of fixed-price contracts, used for all the sites except two residential training centres.
Above all, he believes Quadrant has an advantage through having developed away from the mainstream contract catering world. Its staff tends to turn over less frequently, its sites have not been passed from one contract caterer to another, and there has been a great deal of emphasis on quality and training.
Far from feeling that this puts Quadrant in a commercial backwater, Bate says the culture it has developed by being so separate is highly marketable. "Most contract caterers vie with each other for business and so become almost stereotyped," he says. "Quadrant has developed something different and is therefore special."
