Don't expect the good times to roll again, warns Jerry Brand, managing director, at Host Contract Catering. He says contractors will continue to have to adapt and find new ways of operating to build a profitable future.
It was encouraging to see the BHA's Food and Service Management report issuing a note of confidence for the future of the FSM sector.
There's no doubt that the past 12 months has proved to be the toughest trading climate I can remember. In this business we have all had to cut costs, shed unprofitable contracts, lose staff, improve our purchasing and rethink our strategies for growth.
But it is too early to talk of green shoots. The market is still incredibly tough and contractors are having to find new ways of operating to build a profitable future. Most are taking on facilities management contracts, and I believe we are all preparing for a life where nil-cost contracts are increasingly common.
Change isn't such a bad thing. Many of the unprofitable contracts operators are shedding now are those that were sold badly in the first place. Transparency in the original tenders and a frank and open dialogue with clients about what can and can't be achieved on the budget, is vital now than ever so that time-consuming and expensive mistakes can be avoided.
Operators must also be more flexible about what they do and how they do it. While bigger contractors have long been involved in facilities management, smaller companies such as ours are now embracing the fact that clients, particularly those in B&I, want to discuss bundling their service contracts together to give them one point of contact, and one contract. We are now forging strategic alliances with other service providers in order to be able to offer clients these bolt-on services.
The new realism is that growth is slow, and more often than not that means two steps forward and one step backwards - for every two contracts gained, another is lost. And it's unlikely to get easier. It won't be long before the new breed of professional facilities managers we are now dealing with demand their catering on a nil-cost basis. So contractors will effectively be operating in a retail environment and competing on a level playing field with high-street food retailers with the sales and marketing support that this demands.
So while the talk may be positive for the sector, and I for one am still planning on growth for 2010, the business is changing and constantly evolving and it certainly will not get easier. The good times won't roll again the way they did before, but we will all adapt to the new paradigm as that is what we do best.