When Tim Hammond joined the world of contract catering at the start of the year as chief executive of Elior's UK operations, the industry watched with interest to see how his healthcare and high street experience would boost the ailing business. He tells Janie Stamford that renewed focus on customer service will drive contract retention
How have you found your first eight months at Elior? It's been very hard work and enormous fun. I spent a lot of time learning and understanding the business, the sector and the team and being visible within the company. Being a chief executive in the contract catering sector is 90% the same as the other sectors of hospitality I've worked in - high street restaurants, care homes and budget hotels. If you've got really good general managers in all your sites then they're probably going to be well-run sites. That's common in all markets. Therefore, all the things you have to do to achieve that through recruitment, training and support are also common.
The biggest difference is the wonderful world of clients. In high street restaurants you would have a property director on your senior team, whereas in contract catering you have a sales director instead.
Has your approach to business changed now you're in a new sector? There are differences in the customer profile but the one general theme, which is a big one for Elior, is customer service. Look after the people who are eating the food and drinking the coffee. If they have good experiences, everything else looks after itself. You will hardly ever lose a contract with a client if the customers are extremely happy with the whole experience they're getting. That's generic, whether you're in a B&I outlet all the way through to concessions.
Price, particularly in recent years, must also be a major factor for clients. How has that impacted Elior? When I first arrived, that was one of the things I heard around the industry. I actually now don't believe price is a huge factor. It's important but it's not the number one priority. If a contract comes down to two contractors and one is a bit cheaper but the other is regarded as a better team with better ideas, the client will go to the one they really want to work with and ask it to match the other one's terms.
Price is important but I don't think many tenders are lost because of it. Ultimately it's about what you're offering and what you stand for. At Elior we stand for great food and customer service. That's the proposition.
Now that you've got your feet under the table, what are your plans for Elior for the next 12 months? There'll be a really sharp focus on customer service. We will be training and/or retraining every one of our 10,000 people over the next few months. It's not common in this sector to measure customer satisfaction so we will implement a methodology to measure and monitor it. And I mean the customer, not the client - though we'll do that as well. I'm talking about the thousands of people who eat and drink with us every day.
It's tricky though. I put a similar system in at TGI Friday's in 2006, which had huge positive growth in the first year on customer satisfaction. But of course, every restaurant is a TGI Friday's restaurant. But we've got to be really smart about finding the right method for different sectors. We think we've almost cracked that with a core standard approach and nuances built in around it.
Following a string of high-profile contract losses there is a perception that Elior isn't performing as well as it would like. What's the reality? There's no doubt about it, we need to improve. I've been hired to come in and grow the company. I have a marketing background, they haven't hired an accountant, and 80% of my focus will be on the top line of the business. But the good news is that at the moment we're winning slightly more than we're losing. One or two of the things that we've lost have tended to be high profile and quite often we can't talk about the things we've won.
The contract catering industry is very focused on how much new business is won - it makes good column inches. But more important than that is how much business you are extending and retaining. It's easier to do that than win new business and it only happens if you've been doing a good job in the first place. Since the beginning of January we've retained or extended £80m of our turnover.
How does the negative perception of the business affect staff morale and the views of clients? The morale in the business is very good and a simple measure of that is labour turnover. The industry norm is something like low-to-mid 40s whereas at Elior we're around 20%. People are very loyal to Elior. It is an extremely nice place to work, full of nice people. We have that reputation within the industry.
Interestingly, of the around 255,000 customer occasions we serve everyday, the majority are actually to our clients' clients or customers rather than their employees. As a consequence, many clients are putting a higher value on what we deliver and great customer service. Of course there are many enlightened clients who want to do exactly the same thing for their own people.
Many of the contract losses in recent years were in the heritage market. Is it a sector that needs a particular focus? Heritage is still important to us. There is also an understanding within the market that there is very much a new team at Elior looking after that sector. The nature of the contracts is they're often for five or seven years so things you weren't getting right two years ago could still be the reason you're losing contracts now.
Someone once said "all issues are management issues" and I agree with that. We did have some management issues - those people aren't in the business anymore because they left at various times over the last couple of years. There's now a new team in place and that's the message we're communicating to the market.
Are your growth plans focused on one particular sector? It's pretty broad, but there's a huge growth opportunity in the stadia market and we have a completely unique proposition. First of all, some of the big, well-known names are not in the sector at all. Secondly, one or two of the others seem to be less interested than they were a few years ago in terms of investment.
There are also certain sectors that we prefer to others. We're active in the hospital market with a number of clients but there's a big opportunity in care homes. It's less competitive and a real opportunity in quite a specialised area.
Has your experience at Barchester Healthcare helped you make inroads in the care home sector? It's a big selling point because care home clients know that I understand the business and I think that of all the sectors that caterers come into contact with, it's the hardest one to understand. It's the only place where you're essentially providing food to people in their own homes, people who are often in their 80s or 90s with subtle but critical differences in their food needs - some can't have salt, some can't have fat - it's all very complicated. And then you get on to dementia, which affects 70% of older people in care homes [according to Alzheimer's Society research].
Elior has developed a number of different tools to deal with the changing needs. We've been steadily picking up more and more care home companies over the last year or two and we've just passed the 100-site mark.
What are your thoughts on Caterer's Slash the VAT campaign? The hospitality industry is a huge creator of wealth for the country. It brings in foreign currencies and creates a vast number of jobs. Contract catering alone is responsible for over 100,000. It's absolutely a good idea. I don't think 20% long-term is sustainable, it's got to come down at some point in the future but then you've got to recognise the fiscal constraints for the government as well.
Elior chief executive Tim Hammond will be in the spotlight at the next Arena face-to-face event next month. ITV's news anchor, Alastair Stewart, will quiz Hammond, who took over the helm of French contract caterer Elior's UK operation from Michael Audis in January, on his diverse career path, which includes previous general management roles at Barchester Healthcare, TGI Friday's and Unilever.
major contract wins in 2011
Glasgow Rangers FC Catering and cleaning, £35m over nine years and five years respectively
Port Vale FC Catering and conferences, £5m over five years
National Maritime Museum Two concessions outlets, £5.5m over five years