Sutcliffe wins back Newcastle DSS job
By David Shrimpton
Sutcliffe Catering has snatched back a three-year contract, worth £1.7m in annual turnover, after its rival Eurest failed to achieve nil subsidy on the site.
The contract - to feed 8,500 staff at the Department of Social Security's Contributions Agency at Longbenton, Newcastle-upon-Tyne - was won by Eurest (formerly Compass Services) in May 1994. It had been due to run for three years but was terminated after just two because Eurest found it impossible to operate on a nil-subsidy basis.
Prior to 1994 the contract was held by Forward Catering, taken over by Sutcliffe in February 1994.
Sutcliffe, CCG and Aramark are understood to have bid for the latest deal, while Eurest this time refused to tender.
Sutcliffe sales director Mike Eggleston said seven of the 20 catering outlets on site would now be closed in order to achieve the desired nil subsidy. "It had got to the point where there were so many outlets it wasn't cost effective," he said.
Negotiations with trade unions over resultant job losses were still under way, he added.
Sutcliffe will also introduce its Choices range of in-house brands to the site in order to help reach nil subsidy. Tariffs would rise to a level that offers "value for money to the customer, but allows us to achieve the gross profit we need", Mr Eggleston said.
When Eurest gained the contract in 1994, it offered to return a percentage of profits to the client, but this was never achieved. Eurest managing director John Greenwood claimed: "Within a fairly short period of time it was plain that the circumstances on site had changed materially and, therefore, the contract we had was inappropriate."
Numbers on site had fallen significantly, he said: "The potential volume of sales just wasn't there." He said Eurest refused to bid for the new contract because the client "insisted on a contract that, frankly, we thought was not viable".
He added: "We weren't satisfied that the proposed contract would safeguard us from either a significant change in the number of people on site or a change in the site itself - for example, moving part of it to another location."
