Takeover deals where everyone's a winner

Hardly a week seems to go by without the announcement of the take-over of one contract caterer by a larger competitor.

In fact, the past week has seen two high-profile casualties: Baxter & Platts sold to Granada Food Services for a rumoured £15m and National Leisure Catering to Compass for £11m.

The seemingly relentless expansion of the big three - Gardner Merchant, Granada and Compass - has led to unease in some quarters and a fear that competition in the marketplace could be reduced.

In just over a year Granada has swallowed up Northdowns, CCG (business and industry contracts), Bromwich Catering, Shaw Catering and now Baxter & Platts.

It isn't hard to understand why William Baxter and Robert Platts should have decided to sell.

Overnight they have become very wealthy and yet at the same time will continue as joint managing directors of the company, which will retain its own identity within the Granada portfolio.

In fact, they formed their company when they left Sutcliffe Catering, which later became Granada's main contract catering arm.

So in many ways they are returning home to a business they left amicably 10 years ago.

Apart from displaying the clear benefits of departing on good terms, the Baxter & Platts story highlights one of the key trends of the contract catering industry: employees leave contract caterer to set up own company; that company grows rapidly and successfully; and finally an offer that is too big to turn down is accepted and the company is taken over.

It is a process that has few losers. The entrepreneurs get their reward for working very hard and the big companies are able to expand relatively easily.

Accusations from some quarters that the customer loses don't really hold water.

Properly managed larger companies are able to offer substantial economies of scale in such things as accounts and information technology.

If these bigger firms then try to cut corners or exploit their financial muscle in unfair ways, they will be swiftly punished as they start to lose contracts.

After all, contract catering has relatively few barriers to entry and there are many other entrepreneurs, such as William Baxter and Robert Platts, waiting in the wings ready to take advantage of any business opportunity that presents itself.

It is a truly competitive situation and long may it continue.

GARY CROSSLEY

Editor

Caterer & Hotelkeeper