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Can a good relationship beat contract fatigue?

04 September 2008 by

The decision by investment bank Goldman Sachs to change contractors on its £10m annual catering deal has highlighted the increasing complexity of the contract catering market. Chris Druce reports

Any caterer commenting on a contract loss and trotting out the philosophical "it's just a part of doing business" line is clearly putting a brave face on it. Caterers like to win, often, and as much as possible.

After Compass Group lost its estimated £10m-a-year deal at investment bank Goldman Sachs to rival Aramark (Caterer, 28 August, page 6) sources at the company were doing their best to seem unfazed, but the loss no doubt prompted a few colourful utterances internally.

Of course, changes are inevitable in any contract-based business. Contract fatigue is a constant challenge for caterers: there are only so many ways to package a cheese roll, after all. Keeping the offer fresh remains a challenge and requires a willing partner in the client and a partnership approach that will see the service develop.

Complexity

The Goldman Sachs contract neatly illustrates the complexity of the client-caterer relationship. Industry consultants familiar with the arrangement insisted that the service provided had been thought of as good, with no major problems.

But, tellingly for some observers, Jane Sanderson - Goldman Sachs's own catering contract manager - was shown the door in the spring. This was rather ominous, coming in the middle of a retendering exercise, and, of course, quite beyond contractor Compass's control.

It would seem in practice that getting it right simply isn't always enough and that, for clients, it really can be a case of the grass being greener on the other side.

"It is very difficult when you have a contract for a number of years to keep ringing the changes," said food service consultant Peter Pitham.

"However, the catering market does change, and it is incumbent on the caterer and catering consultants to keep up with the latest industry trends."

City caterer Vacherin, a former Caterer Adopted Business, is aware of the importance of remaining proactive with existing contracts and, like many peers, has a structure in place to facilitate this.

Sparkle is the name for its own internal process that encourages managers and teams to take a step back from their hectic working days and consider how they are measuring up to their commitment to clients.

Mark Philpott, managing director at Vacherin, said: "The idea comes from the need to make sure we evolve with our clients to meet their changing needs and don't get left behind." The success of the approach is demonstrated by Vacherin's ongoing relationship with London creative design agency Imagination, which it has looked after since early 2003.

Pitham agrees that a strong relationship, with give and take on both sides, is vital. "Contracts do go wrong for a number of reasons, but the one I find the most is that, despite clients highlighting their dissatisfaction at a caterer's performance, the catering organisation does nothing, or appears to do nothing, about the situation," he said.

Communication

Contract caterer Jill Bartlett believes communication is integral to success. The firm is celebrating the extension to 2013 of a deal with its first-ever client, law firm Shearman & Sterling, which it won in 2004.

Jill Bartlett, founder of the company, said: "Our business set-up has been specifically designed to directly feed back to all clients. We see their business as our business, and collaboratively we design successful catering propositions."

It is more imperative than ever that strong relationships are forged and retained, according to Alastair Storey, chief executive of BaxterStorey. Storey, whose company took the Virgin Atlantic airline deal from Compass earlier this year but lost foreign exchange company Travelex to ISS Eaton, said: "In difficult economic times, good product and service is always desirable."

Hugo Miller-Brown, managing director of event caterer Seasoned, part of the Crown Group, agrees, and added that caterers that listen to their clients' needs as the UK economy slows, and adapt accordingly, will prosper - while those that don't will fall by the wayside.

"When you go to Tom Aikens or Gordon Ramsay's restaurants, it's about experiencing what they do," said Miller-Brown. "Our business as caterers is fundamentally different. We have to say to clients ‘What would you like to achieve?' Given the current trading environment, if you're not listening to your clients and helping them, you're going to get into trouble."

Recent contract changes

  • August Goldman Sachs - annual turnover £10m (est). Compass to Aramark.
  • June Cameron McKenna - total turnover £4.5m. Elior to Harbour & Jones.
  • April Hewlett-Packard - £4m (est) annual turnover. Compass to ISS Eaton.
  • February EDF - total contract turnover £17-£21m (est). Compass and Aramark to Elior.
  • December 2007 Bank of England - annual turnover £3m (est). Elior, Searcy and Compass to Compass.

Want to read more?

Read more at www.caterersearch.com/contractcatering

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