The heritage sector has become increasingly attractive to caterers, with Brits becoming accustomed to making the most of local outdoor attractions. But how easy is it to break into and what makes it worth the effort? Rosalind Mullen reports
With the beleaguered economy pinching purse-strings, it's no wonder contract caterers are hunting around for new business sectors. One area that's seen particular growth in recent years is the heritage sector, where niche operators such as Lindley Group and Rhubarb are pitching against the multinationals.
Leisure might seem an odd opportunity in a downturn, but while trading in traditional contract catering markets is tough, the heritage sector - which includes historical buildings, attractions and gardens - is holding up well. It seems that since the last recession we Brits have become used to enjoying ourselves and we budget accordingly.
Statistics from the Association of Leading Visitor Attractions (ALVA) show that outdoor attractions, such as farms, gardens and historic properties, reported notable year-on-year increases in visits for the first quarter of 2011, with admissions rising by 7% across the board. While the economy and weather makes them cautious, some 68% of attractions say they are moderately optimistic about the year ahead.
staycations are here to stay
There's also evidence that recession is forcing Brits to holiday at home more, which again augurs well for attractions and historical sites. Economists are predicting that the rise in staycations will give the UK tourism industry a £7.3b boost this year.
Inevitably, this is filtering down to the catering industry. "We've seen an increase in the numbers attending museums and attractions," confirms Carl Morris, director of marketing and communications at Elior.
"In museums, where there is often free entry, we see a slightly different spend per head because people are looking for value and deals that compete with the high street."
Lindley's chief executive Adam Elliott reckons the heritage sector is making itself attractive to caterers on two counts. "In the past few years we've seen more people spend money in the UK and they go to museums and attractions so there is natural growth there," he says. "The second reason is that many historical sites are seeing the commercial benefit of enhancing their offer, so there is more space than before."
The latter point is particularly resonant in the light of Government funding cutbacks for such sites - in November the Arts Council budget was slashed by 30%. No wonder museums and galleries can see the benefit of commercial enterprises to augment the drop in funding.
While for caterers the heritage sector is clearly an additional revenue stream to their traditional markets, allowing them further growth, there are other advantages, too. Consultant Tim Cookson at Litmus Partnership points out that high footfall venues have cash-flow benefits, in that caterers bank their cash daily, unlike traditional contracts that are run on a subsidy or where the client pays 30, 60 or 90 days down the line.
Many caterers also cite the fact they can showcase their commercial talents. This is increasingly important in a market where clients expect caterers to provide branded retail operations in staff restaurants, hospitals and higher education. It also appeals to foodie businesses such as Rhubarb, which can show off their locally sourced goods, trendy packaging and so on.
"Caterers see heritage as an opportunity to test concepts to the public and gain credibility, which will add value to their core staff restaurant business and make them more attractive to clients across the board," says Cookson.
Morris at Elior agrees: "There is a greater expectation in customer experience across the board. Some sectors are more commercial than others so you can cross over with expertise and send it back."
Ironically, this makes getting into the cliquey heritage sector a catch 22 situation, where the prerequisite to getting a contract is to have had a successful public-facing concept and vice versa. As Cookson explains, the bigger caterers have always been on the scene as they have been able to provide the security and investment to develop hybrid concepts based on high street successes, such as Starbucks, Costa and Pret A Manger.
Others have entered the market through acquisition - Elior bought Digby Trout, BaxterStorey took Benugo, CH&Co has its Ampersand and Chester Boyd divisions.
Rhubarb Clients are looking for flexibility and innovation
Events caterer Rhubarb is using its strengths to stake a claim in heritage business. As managing director Pieter-Bas Jacobse explains, heritage clients tend to look for tailor-made solutions, flexibility and innovation, all of which as a small caterer, he says Rhubarb can provide.
"A specific consideration was our expertise in bespoke catering so we looked at venues who were looking for a tailor-made approach," says Jacobse.
Rhubarb will turn over £30m this year, with some 30-35% of this business now in heritage. The fixed contract side of the business began to develop from 2005 when it won the Royal Ascot Racing Club business, followed by the Silver Fleet contract in 2007.
It broke into the retail sector in 2008 when the Rhubarb food bar opened at Heathrow's Terminal 3. And its entry into heritage was sealed in 2009 when it opened the Gallery Mess at Saatchi Gallery in London. This was followed by Bond & Brook restaurant in London's Fenwick department store in 2010, and earlier this year by a contract to run the three restaurants and 13 bars at the Royal Albert Hall, ousting Compass Group division Leith's 15-year stint.
In the past month, Rhubarb has bought £2m a year event caterer Eventuate, which manages hospitality at Henley Regatta, as well as catering at the Paris and Farnborough airshows and CESNA in Geneva. This summer, in a deal with SSP, it launches at City Airport.
Rhubarb uses its foodie credentials to tender for contracts. The venue has to be prestigious, unique and close to the existing events business. The terms of each contract vary, but Jacobse says they look for joint-venture deals where both sides benefit.
Looking to set up your stall: the do's and dont's of heritage pitching
New markets within heritage and culture are being winkled all the time as the sector grows. An example is Jamie Oliver's 2010 launch of Festival Feasts, which is ousting the traditional burger van at festivals. Likewise, garden centres are developing restaurants and delis alongside farm shops and child-friendly activities.
Another evolution is that catering is increasingly becoming part of the reason to visit an attraction in the first place. Take Peyton & Byrne at London's Royal Academy and Searcy's at the Portrait Gallery - both restaurant destinations in their own right.
Of course, there are downsides in heritage. While there tends to be less client interference, allowing caterers more autonomy, the management and commercial skills needed to manage concessions are different from traditional contract catering - for instance queue management, retailing and packaging.
Consultant Tim Cookson warns: "Caterers expecting to transfer their existing business and operating models will fail, as a number of contract caterers have in the past."
In addition, success is often weather-related, or dependent on issues over which the caterer has no control. In short, as consultant Chris Stern explains, it is a high risk and reward sector: "The main thing is the risk. It's about getting a balance between complementing the client's aspirations for their site and being commercially viable. It can be a slightly strange world - like running a business with one hand tied behind your back. There are sites that are completely commercial, too, but most have some constraints," he says.
Stern adds that as a start-up, caterers need sound financial backing because there is often a higher capital outlay required.
"The first contract is always the hardest," he says. "However, there's an increasing cross-over between concession and B&I type business, allowing B&I contractors to use existing contracts as a proof source. B&I is also increasingly commercial, so there's less of a gap for contractors to jump, although not all of them are as commercial as they would have potential clients believe. Very few have the sales machine of companies such as Crown Group to call on."
Looking ahead, Cookson reckons the prospect for growth will be dictated largely by the economy: "With inflation and interest rates due to rise, growth at best is likely to remain flat," he says. "That said, the 2012 Olympics will create a spike in leisure spend, particularly in London."
Lindley Group still small enough to give a personal touch
Another reason why the heritage market is growing, says consultant Tim Cookson, is because multinationals, such as Elior and Delaware North, that have traditionally operated concession businesses in other countries are now transferring these skills to the UK as a means for growth and market share.
But while the big boys such as Compass and Sodexo have always been on the scene, Lindley chief executive Adam Elliott (pictured) believes smaller companies are now at an advantage. He's observed that clients like to deal directly with the senior team, which "can open doors for newcomers in the heritage sector".
Independent caterer Lindley Group has made a name for itself in outside events and the stadia sector with prestigious contracts at venues such as Manchester City Football Club.
But Elliott is looking to broaden the business. In March, he launched a new division, Lindley Heritage, to chase contracts in the heritage sector. It already has two under its belt - the prestigious Hepworth Wakefield gallery (far left), which opened in May, and a contract at Blackpool Winter Gardens.
Elliott, who took over last August, is looking to break into new sectors and is keen to change the perception that Lindley is simply a fast and efficient high-volume caterer.
His ambition is to double turnover to £100m in two years' time and, although he is approaching the heritage sector slowly, he expects it to contribute at least £10-£15m.
"With respect to others who have been out there for a while, people are looking for something new. We are still small enough to give a personal touch. Clients like to do business with the chief executive, for example."
Elliot also enjoys the fact he can introduce joint ventures that might not be possible in the corporate world. For instance, Lindley is working with fresh produce supplier Sourced Market, based at St Pancras station.
"We can bring in retail experts when we go to tender to add that wow factor," he says.
Elior Museums and stadia remain stable business
Multinational caterer Elior, which turns over £250m in the UK, has pursued a strategy of organic growth and acquisition in this country, mainly across B&I, healthcare, defence and education. Its interest in heritage began in 2002 when it acquired Digby Trout, which at the time operated in venues such as Southwark Cathedral and the Science Museum.
Today, Elior actively pursues heritage business. Carl Morris, director of marketing and communications, explains: "Most businesses want a balanced portfolio," he says. "The sector offers a two-way exchange - the best practice shown in City contracts is an expertise that can translate into the rest of the business."
There is also stability. "Other sectors [such as B&I] can fluctuate in terms of business, but museums and stadia tend to remain stable. Footfall is increasing and holding up well," says Morris.
That said, he concedes there is some pressure in the functions side of the heritage sector, as this is often linked to performance in the corporate sector. In the downturn, for instance, companies are cutting down or hosting functions in-house.
While coy about revealing company figures, he estimates that excluding the retail market, food service is worth £800m in this country and 64% is contracted out "so there is still an opportunity".
In-house catering at the National Trust how to make heritage catering work
The National Trust has developed a commercially successful catering division in recent years. Trish Topliss, head of F&B, explains the key features expected of a heritage catering operation
What is the value of your catering? We provide catering for more than 10 million people a year at more than 150 National Trust properties. This brings in more than £11m profit, which is returned to the National Trust charity for conservation purposes.
How has the market changed? The demand is now for a casual, grazing style of eating instead of the traditional hot lunch. In response, we have modernised our food offer to include better quality sandwiches. Soup (all freshly made daily at each site) remains one of the biggest sellers.
Another trend is the rise in coffee sales, which mimics the high street. We introduced speciality coffees six years ago and sales now equal those of tea. We've studied the market segments to determine which sites still require a traditional tea and cake offer rather than a more contemporary coffee shop one.
What type of design tends to work best? Using a modern coffee shop design style we've invested in the facilities at dozens of locations to enable visitors to have either a quick snack or a full lunch. The new quick-service design also means more visitors can be served. And where there are no facilities for a tea room or café, we've introduced grab-and go-style kiosks.
What are the benefits of in-house catering? It gives the chefs more freedom in creating recipes and menus. Some 85% of all produce is cooked on site, with the chefs using their own recipes and sourcing local ingredients to create a bespoke food offer. Customers appreciate this and I believe the taste is better.
And you have home-grown produce, too? Yes, some sites are lucky enough to have the use of produce from walled gardens on the estate. This is an area of development that will continue. Connecting National Trust estates with the food grown on them is one of our biggest opportunities.
How many people do you employ in catering? More than 1,000 people. They work sociable hours and we help them to achieve recognised catering qualifications.