Up close and personal
Mike Eggleston and Steve Williams left large companies to set up on their own because they thought clients would prefer a more open accounting system. But client reaction was not quite what they expected. Jane Baker reports in the first of our new series on independent contract caterers.
Fed up with constant restructuring of his role at Sutcliffe, Mike Eggleston took the plunge in 1998 and started his own company. Launching Eggleston Catering Services was something he had wanted to do for 10 years. He also felt that it was time to offer clients a more open approach to the thorny subject of purchasing and discounts.
"The big contractors are often economical with the truth," says Eggleston, "and some clients distrust caterers because they can't find out what is happening. We offer an open account service, we pass on discounts, and our bookwork is easy to audit."
However, potential clients weren't quick to take up his offer. Eggleston says: "Some organisations are frightened of taking on a small company, and staff catering is still a low priority. It is often shoved on to the back shelf, and many companies will pay for hidden extras if they can afford it, rather than cause the upheaval of changing contractors or causing flak with the boss." Eggleston, however, retains no discounts and charges no payroll costs that are not legitimate.
"Group deals are a favourite," he adds, "and suit local clients because they can avoid making decisions, saying, ‘We can't do anything about it,' because the decision-making is being made at a group level. Unfortunately, honesty is not a sufficient benefit to [induce them to] change contractor."
Despite this, Eggleston won his first contract, in September 1998, only a few months after setting up, taking on two sites for Damart which were previously run by Sutcliffe. He then quickly added a contract with Magnet, won from Aramark. He does not go for the hard sell, preferring instead to keep in regular contact with a number of possible clients, and being there at the right moment when they decide to change their catering.
The average numbers on-site in Eggleston's existing businesses total 250-300, but he's aiming for 1,000-plus and is currently talking to five large companies. He is confident that he will have 10 contracts by the end of this year, doubling his turnover.
He limits his geographical reach to Yorkshire and the surrounding areas, saying: "If we go further afield, we can't deliver a personal service. Anything more than one-and-a-half hours from our base is too far."
However, not wishing to lose out on opportunities that arise when a current client wants him to look at another site out of his area, Eggleston has established contact with a network of like-minded independent contractors throughout the Midlands, and the South and West of England. When a suitable offer comes up, he and the local contractor put in a joint bid.
He also took a look at the schools market, but quickly rejected it. "They now have the funding and the authority to manage their own catering, but most head teachers have never had much to do with catering and don't know what to do," says Eggleston.
"Many have also brought in consultants and I don't like talking to consultants - they're clueless. Invariably, people get them in to drive down costs, regardless of quality - which is not good news."
Steve Williams likes small companies that have strong ideals and something to sell. That was why he founded Celtic Catering Partnership in January 2000. Williams, based in Wales, had spent 25 years in the industry - 12 with Bateman Catering, which was subsequently bought by Eurest, and 11 with Caterwise Food Services, which he helped to build into a business with a £5m turnover and 70 contracts.
When Caterwise was sold to Campbell Bewley, which recently entered a joint venture with giant Aramark, Williams decided to leave. "Clients in Wales like a personal service where they can reach the decision-makers easily," he says. "But they found it difficult to get in touch with anyone, and the whole business became more focused on Campbell Bewley in a global sense."
Although he continued to sell successfully for Campbell Bewley, Williams noticed that clients were talking about handing their catering to smaller companies, but there were virtually none in Wales at the time. A niche market had opened up and Williams was quick to take advantage.
In October 1999 he resigned from Campbell Bewley, and in January 2000 started his own company. In his first year, he achieved his target of eight contracts, beat his forecast of £500,000 turnover by £250,000, and was employing 35 staff instead of the predicted 25. This year, he is again expecting to beat his targets of 20 contracts and turnover of £2m.
Open book policy When he started his company, Williams had several aims: to offer a completely open book policy, to give the client a total net purchasing deal, and to offer his staff shares in the company after four years' service as a reward for loyalty. "I'm trying to give a new look to the industry," he says. "You hear comments from clients who say contractors rip them off when all they want to know is how much a loaf or a pint of milk costs. I aim to change this by showing them how honest we are."
However, he has found that many organisations are not prepared to take a risk with a young, small company and don't believe his claims that he can buy more effectively than the larger contractors.
"No client would normally be able to take an invoice down to the restaurant and match it with what he sees," he says. "Each invoice states exactly what has been spent on items such as food or equipment. Our purchasing is effective because we're flexible and not limited to nominated suppliers."
As a small, agile organisation, his company can afford to listen to what clients want and not be tempted into pushing in a system simply because it's company policy. "Choice is paramount," says Williams, "and we constantly monitor sales to make sure client employees are getting what they want. Our menus reflect the ethnic and regional demand of customers."
If a client wants to reduce costs (and most do), he can offer solutions without fear of losing money. He claims that larger companies, whose purchasing powers decrease with lower volumes, would not be as quick to comply with the client's wishes. He now caters for organisations such as Mitel Networks, Chepstow, and Ascon Telecommunications in Cardiff. Most of his clients were with Campbell Bewley, whose former total of 47 Welsh contracts has now shrunk to about 10.
Mike Eggleston on the record
What do you think of branding?
Although I accept that the high street influence is strong in contract catering, I don't consider branding to be a way of attracting new business. Most people at work still like the traditional home-cooked food rather than bought-in products so, although we have pizzas and pasta, we don't see the need for brands. I've seen branded outlets where the branding looks better than the food.
What type of contracts do you prefer? Cost-plus every time. The swing to fixed-price is because clients do not trust contractors. We have only one fixed-price contract, and this was handled by a consultant who gave us misleading specifications. We won't make what we predicted by the end of this year, so I won't continue on the same basis.
Steve Williams on the record
What are your views on purchasing?
We work on a management fee and this is how we make our money. Our buying power is better than that of the larger companies, as the client gets all discounts. None goes on overheads, profits or shareholders' income. We involve the client in meeting our suppliers, to see what benefits they offer, and we encourage our catering managers to take advantage of any promotion that a supplier is offering.
Are you planning to expand in the future? We intend opening a second company at the end of this year, another arm of catering we believe is a growth area. But I can't reveal what it is at the moment.
Eggleston Catering Services
18 Church Lane, Bardsey, Leeds LS17 9DN
Tel: 01937 574446
Web site:www.ecs-catering.co.uk
Founded: mid-1998 by Mike Eggleston
Initial investment: £20,000, self-funded
Contracts: seven
Turnover: £750,000
Staff: 43
Celtic Catering Partnership
33-35 Cowbridge Road, Pontyclun, Mid Glamorgan CF72 9EB
Tel: 01443 238238
E-mail:celticcatering@aol.com
Founded: January 2000, by Steve Williams
Initial investment: £2,000, self-funded
Turnover: £1.5m
Contracts: 17
Staff: 65
