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Catering bosses question Olympic contract profits

29 July 2010

"Ego and PR" are the only reasons to cater at the London 2012 Olympics, according to contract caterers who question the profitability of the games as the two-year countdown to the start of the Olympics begins.

The London Organising Committee of the Olympic Games and the Paralympic Games (Locog) began inviting caterers to bid for one or more of the 12 food service contracts, with the first award expected to be announced by the end of August.

However industry insiders are concerned about the profitability of the contracts and expect the cost of building a bid-winning tender to be offputting for smaller operators.

One high-level catering boss told Caterer: "Most caterers at past games have actually lost money. You run the risk of putting all your talent and resources into a four-week contract and damaging your day-to-day business for something that is potentially unprofitable," he explained. "The only reason to do it would be ego and PR."

This wariness is shared by another catering chief, who raised concerns over the amount of preparation needed in the run-up to the Olympics. He said that the biggest challenge was that earnings capacity was judged over the four weeks of the games. "But that completely ignores the two years of effort that will need to take place to get us there.

"The reality is that if working on the Olympics looks like a loss to us, we're not going to spend very long considering it. While being involved is a once-in-a-lifetime opportunity, that isn't the measure of success," he added.

London 2012 sees catering opportunities being broken down into smaller lots for the first time, in order to attract operators of all sizes. But despite this, the scale of the tender process is seen as enough to drive interest away at the first hurdle.

"A lot of the smaller players will struggle under the weight of bureaucracy. The level of work that has to be completed at the tender stage is extraordinary," said another industry source.

Consultant Chris Stern shared this concern. "It's essentially like setting up a whole business just for four weeks work and I think a lot of the caterers are saying ‘no, thank you'," he said.

Locog was unavailable for comment.

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By Janie Stamford

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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