Schools hold back growth in contract catering

The number of catering outlets run by contractors dropped last year from 17,865 to 17,830, according to the British Hospitality Association's Contract Catering Survey 2001, published today. The drop was mainly due to a fall in the state education sector, where the number of outlets decreased by 7.6% - the fourth successive year in which there has been a decline. The number of state education outlets now stands at 4,621, down by 25% from its peak of 6,140 in 1996. In a presentation to launch the survey, Jim Walker, managing director of Initial Catering Services, blamed some local authorities for this year's drop. They were using the switch from compulsory competitive tendering to the "best value" system to delay letting their contracts, he said. But Walker was optimistic about the future of the state education sector, as the pace of letting contracts picked up again and smaller schools, now in charge of their own budgets, began contracting out their meals service. The healthcare and Ministry of Defence (MoD) sectors, on the other hand, enjoyed healthy expansion last year. The number of contractor-operated outlets in healthcare rose to 971, from 923 in 1999. That represents an almost three-fold increase since 1991\. In the MoD, the number of outlets surged from 502 to 623. Ten years ago, that figure was just 190. Even in business & industry, the biggest but most mature sector of the market, the number of outlets increased from 8,766 to 8,930. The total number of meals served continued to grow. It was up by just over 8% overall to 1,471 million. The industry's wages bill rose by 7% from £1.336b to £1.433b, despite an almost static number of employees. The BHA said it reflected a "tight labour market" and was in line with the hospitality industry as a whole. The minimum wage and other employment legislation had also had an effect. But the increase was only half that in 1999. And the figure for wages as a percentage of turnover fell from 44.4% to 43.8%. The number of full-time employees continued to decline and the number of part-timers continued to increase. The number of full-timers fell to 103,424, a drop of 1.3% compared with 1999 and of 10.9% compared with 1998. The number of part-time staff increased by 2.8%. Total turnover in the contract catering industry increased by 8.5% from just over £3b to nearly £3.3b. In 1993, turnover stood at just £2b. Turnover in contract catering terms represents total billings to clients: including food purchases, wages and management fee. The survey also showed the continued commercialisation of the contract catering market. Two-thirds of contracts are now on a fixed-price or profit-sharing basis. The number of cost-plus-management-fee contracts has fallen from 53% of the market in 1984 to 33% in 2000. The number of in-house branded outlets rose during the year from 2,461 to 4,352. High-street brands enjoyed more modest growth, from 280-299. The cost of food as a percentage of turnover fell by one percentage point to 36%. Average food cost per meal dropped by just over a penny to 80.8p. This figure is down from 88p in 1993.