Market Forces
It's been 30 years since the Ministry of Defence (MOD) first started talking about overhauling the way its junior servicemen in the UK are fed. Now the first trials that could completely change the face of MOD catering are taking place. If successful, it plans to roll out a brand new catering service across all of its sites, worth some £400m.
"This is not just another catering offer," explains Lt Col Phil Lewis, a member of the Pay As You Dine (PAYD) team which has been set up to oversee the project. "PAYD implies it's as simple as a till at the end of the counter, but it's much bigger than that," he says. "It's a cultural change for the Services. It's about improving the quality of life for the junior ranks and their dependants by integrating catering, retail and leisure."
Sodexho, Aramark and Compass have each been given a trial site and all will have three trials running by next year. At the end of 2003 all the trial sites will be assessed and, if deemed successful, PAYD will be introduced nationwide in 2005. Sites will then be open for tender, grouped on a regional basis.
The caterers are transforming sites they were already supplying within the old MOD system. And transforming is not too strong a word. Until now, the MOD has paid a fixed fee to provide three meals a day for each junior serviceman. About £100 a month (£3.38 a day) was automatically taken from soldiers' pay, regardless of how many meals they ate, and the caterer received £1.77 a day for each entitled person. "Frankly," says Lewis, "the fewer meals they ate, the more the caterer made. They had little incentive to make the dining attractive, because they got the money no matter what."
In addition, the existing rules are draconian: usually breakfast is served from 7am to 8am, lunch from noon to 1pm and supper from 4.30pm to 5.30pm. Dining areas are closed to visitors and families, and married personnel are excluded unless living alone on site.
Now the contracts are being brought into the 21st century with the intention of offering a competitive place to eat and relax rather than a refuelling station. It is up to the commanding officer at each site to agree the detail, but the basic principle is the same: caterers will run the sites as a business, offering a one-stop shop for catering, leisure and retail.
For the first time, service personnel will be free to choose to spend their money on site or go elsewhere. The trial sites all have cashpoint machines where servicemen can get cash or charge up a smart card which identifies them. And should a serviceman run out of cash at the end of the month, he or she will still get fed and the caterer will claim the money back later. The MOD will still subsidise certain areas such as feeding soldiers on duty and maintaining basic infrastructure, but that's where the intervention will stop.
"It's potentially a win-win situation all round," comments Lewis. "We get a more modern, integrated facility, the soldiers get good value for money and more choice, and the caterer gets a huge potential market. If it means we recruit and retain four or five soldiers through offering better conditions, it's worth it. But it will be up to the caterers to pitch it right. Otherwise, the boys will go elsewhere."
Trial one: Sodexho
Hyde Park Barracks was the first trial site to go live, on 4 September. In the middle of Knightsbridge in central London, it is home to 500 members of the Household Cavalry Mounted Regiment and 150 families.
Andrew Leach, managing director of Sodexho Defence Services, explains the changes: "The restaurant here was grim, institutional, inflexible and stank of horse pee. With supper closing at 5.30pm, the men often had to buy a take-away curry and snacks from the high street to get them through the day."
Between them, the MOD and Sodexho have spent about £300,000 on refurbishing the site. The MOD takes care of the basic infrastructure and Sodexho the rest. It has completely revamped the interior with wooden floors, bright colours and Sky TV. The area is now open all day from 6am to 11pm, with a bar that serves pints to off-duty personnel for £1.40 (half local pub prices) from 5pm. An undisclosed percentage of Sodexho's profits are ploughed back into facilities at the barracks, which is expected to act as an incentive to soldiers to stay on site.
The MOD is still committed to offering junior ranks a "core menu", a minimum nutritional requirement for a fixed price, but, in addition, customers now have the choice to trade up. The price of the core option remains the same - 90p for breakfast, £1.10 for lunch and £1.38 for dinner. Dinner might be spaghetti bolognese, chips, veg, a drink and a doughnut (£2.30 for visiting civilians or families), but £2.65 will now buy sweet and sour pork with rice, a drink, veg and a dessert. Pizzas, sandwiches, coffees and snacks are on offer all day to eat in or take away.
Steve Adley, Sodexho's regional director, says it's too early to gauge an average spend but he's amazed at how much the servicemen are trading up. "It's still largely a core menu, but we know it will evolve."
At the end of the caf‚ is a Spar shop, which sells everything from nappies to confectionery and is open seven days a week from 7am to 11pm. "A lot of the wives now come in to buy nappies and essentials at good prices," says Morgan.
Trial two: Aramark
The largest naval air station in Europe, RNAS Culdrose in Cornwall, opened as a PAYD site on 23 September. There are up to 3,000 Services personnel and civilians on site. Under the old contract it had what Andrew Harding, Aramark's PAYD project manager, describes as a 700sq m indoor arena for a dining hall, serving the core menu, a NAAFI-run Spar shop and an old tavern bar.
Aramark has invested close to £500,000 in transforming the site. The main hall, renamed the Ocean Complex, has been divided into the Ocean bar, a coffee lounge, a foodcourt and seated dining area.
Harding describes the Ocean bar as the first trendy bar within the MOD, boasting wooden floors and Italian leather settees and serving 40 bottled beers and wines by the glass. It is open at lunchtime and from 5pm to 11pm. Entertainment includes a 47-channel digital music system, Sky TV, a pool table and darts. Sales have increased fourfold since opening. At the other end of the hall is the Ocean Lounge, with Starbucks-branded coffee and brightly coloured settees, which is open from 9am to 9pm.
The 250-seat Ocean restaurant and Ocean foodcourt have four newly developed branded offers: San Vicento has one of only two wood-burning pizza ovens in Cornwall, according to Harding, and is the most successful part of the operation so far; Pan Geos is a wok and omelette station, also offering Chinese, Indian and Thai dishes; Home is traditional British and the main core meals counter (but one core meal option is available at every station); and fourth is Radicchio's, a deli and salad bar with a multi-deck "to-go" area. All prices are shown as retail with core menu options highlighted so entitled Services personnel can decide whether to trade up without a price differential being shown to non-entitled customers.
On an airfield site about 2.5km away is the bistro-style Atlantic caf‚, open from 7am to 3pm Monday-Friday and offering an all-day breakfast, deli bar and coffees. It will soon be complemented by a sandwich-delivery service around the base.
Aramark has retained the Spar shop but increased its offering, and weekly takings have risen from £8,000 to £15,000 since opening. A retail outlet is also being planned for the Atlantic caf‚.
Jim Reeves, director of Aramark Combined Services Division, says the site is exceeding expectations so far, with 50% of those on site now trading up in some form.
Trial three: Compass
RAF Henlow in Bedfordshire, home of the Centre of Aviation Medicine, went live on Monday (11 November) following refurbishment of the site.
Mike Sparrow, managing director of Compass Government Services Division, says previous facilities amounted to a dining area, drinking club and Spar shop, with the usual restrictions and traditional offerings. "The investment in the trials focuses on the junior ranks, but it's not exclusively directed at them," he says. "Our objective is to provide a holistic catering service to the whole community, and we expect some of the philosophy of retail catering to overflow into the officers' and sergeants' messes."
Junior ranks were previously offered a six-week menu cycle of traditional dishes such as gammon, breaded fish, and pies, under an eat-now-or-never policy. From the existing "functional" building Sparrow's team are creating a "village green" within the station, incorporating a shop, a caf‚-bar-restaurant, a pub, a children's play area, Internet facilities, a leisure machine area and dining room. The caf‚-bar will open from 9.30am till late, serving sandwiches, paninis and bakery and grill items, as well as wraps, Tex-Mex cuisine, stir-fries and burgers.
"We want to appeal to a broad range of customer groups," says Harding. "Families will be able to drop in for a coffee and leave the kids in the play area, while civil servants can pop in for a quick lunch."
The dining room will be the focus for the core menu offer, offering traditional service at set times, but in addition there will be several themed concepts: for example, Trattoria will offer pasta and pizzas, and Spice will sell Chinese and Indian dishes with theatre-style cooking.
All the facilities will be housed in one building, complemented by an outside barbecue and terrace area, surrounded by a picket fence for the "village green" feel. Some 30m away is the club, which is being turned into a pub, while the Spar shop will rebranded as a Whistlestop, with a much broader portfolio of take-away and convenience products.
Sparrow sums it up: "In the end, our success and the viability of the whole scheme will be measured by customer satisfaction."]
The caterers
Sodexho Defence Services
Contracts: 85
Annual turnover: £90m
Trial site: Hyde Park Barracks
Opened: 4 September
Staff on site: 35
Services personnel: 500, plus 150 families
Managing director: Andrew Leach
Regional director, central London: Wayne Morgan
General service manager: Steve Adley
Compass Group Government Services
Defence contracts: 70-plus
Annual turnover: £170m (includes local government, police, Prison Service and MOD)
Trial site: RAF Henlow
Opened: 11 November
Staff on site: 130 (expected to rise)
Services personnel: 600 airmen, plus 400 civilians
Retail services manager: Kevin Hobart
Aramark Combined Services Division
Contracts: 45 (including one healthcare)
Annual turnover: about £35m
Trial site: RNAS Culdrose
Opened: 23 September
Staff: 70 Aramark, 40 MOD
Services personnel: 1,500
Civilians, contractors: 1,500
Director: Jim Reeves
PAYD project manager: Andrew Harding
Site general manager: Alan Connor
PAYD head chef: Dean Miles
Contract prospects within the MOD
Potential PAYD sites: 280 nationwide
Customer profile: junior ranks in the Army, Royal Navy and Royal Air Force
Total Services strength: 205,350, with 41% living in. Of livers-in, 74% are junior ranks
Defence community: up to 500,000 (including families, contractors, etc)
Existing statistics
\ Average meal uptake per week: 10.4 (women in the Services consume only 7.8 meals per week on average)
\* Only 2% eat their full allowance of 21 meals per week
\ Some 12% eat four meals or fewer per week
Source: MOD
