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The Caterer

News round-up: food service

26 December 2005 by
News round-up: food service

Strike, schools and scandal keep catering in the news.

The world of food service has been shaken up this year by a TV chef's campaign to improve school dinners, troubles at the world's biggest contract caterer, and a strike that brought BA to a standstill. Paul Gander investigates

What a difference a year makes - or, more exactly, a TV series. A year ago Jamie Oliver was just another celebrity chef, perhaps with a little more commercial nous than some of his kitchen compadres, but by the end of his four programmes he was also an impassioned campaigner.

Even before Jamie's School Dinners entertained us with images of frantic dinner ladies, Turkey Twizzlers and people dressed up as sweet corn, the Government knew it had a problem on its hands. Coincidentally, in February, Education Secretary Ruth Kelly announced new standards for school meals, just weeks before the series aired.

In parallel with the TV expose, Oliver launched his Feed Me Better manifesto. Key objectives included increased Government spending on school meals, a ban on junk food, and better pay for school catering staff. Pressure came from inside Parliament, too. MP Geraint Davies proposed a private member's bill to improve standards and extend Ofsted inspections to school catering.

Demands for better funding grew, with at least one school featured in the series ditching its contract with Compass division Scolarest. By March, Scolarest and Sodexho had countered by setting a 55p-a-meal lower limit on future state school contracts.

Parental guerrilla tactics produced local results in the London boroughs of Camden and Merton, and a major battle appeared to have been won when the Government agreed to boost central funding by £220m over three years. But in October the School Meals Review Panel reported that the real figure needed to raise nutritional standards and install the necessary kitchen equipment was closer to £780m. At that point mutterings were heard from the Department for Education and Skills about 75% of parents being prepared to put their hands in their pockets for fresher food.

The need for kitchen refurbishment was a key element in the review panel's report. It echoed a September survey of more than 10,000 schools carried out by Caterer and the Local Authority Caterers Association (LACA). Two-thirds of respondents rated as "poor" kitchen facilities in up to a quarter of schools in their areas. In other areas the proportion was much higher.

Then, in November, LACA announced that demand for school meals had dipped by up to 10% as a result of Oliver's campaign. If there was no pick-up in numbers, jobs might be at stake, LACA warned.

Last week industry figures warned that the Government had done little more than throw money at the problem. They claimed schools could waste the money if advice was not forthcoming from the recently formed School Food Trust.

Compass goes west

A verbal lashing from Oliver was not the worst of the woes besetting Compass Group. In fact, the highest point for Compass in the second half of the year - maybe the whole of it - was when its Moto Hospitality business stepped up to the pedestal as overall winner of the Loo of the Year Awards.

Clean loos, maybe, but otherwise the pungent stink of a UN corruption investigation, profits down the pan and a revolving door in the boardroom.

The first calls for chief executive Mike Bailey to step down came early in October, after the third profit warning from Compass in little over a year. The group also announced plans to sell off its Select Service Partner (SSP) travel concession company for about £1b.

Later in the same month came news of the UN investigation into a food and water contract in Liberia awarded to Compass business Eurest Support Services (ESS). As media interest in the scandal grew, UK and Ireland chief executive Peter Harris and Andrew Seiwert of ESS were the first to clear their desks. Questions about business transparency followed, with customer concern over contracts affecting the whole industry.

Shuffling the deck

The ESS investigation was not alone in putting the "ex" into "executive". Long before that storm nudged on to the media radar, there were summertime departures from the Compass boardroom: Harris's predecessor Don Davenport, and Peter Aldrich, chief executive of the UK and Ireland business and industry division both retired. Chairman Sir Francis Mackay prepared to hang up his spurs, with the promise that Sir Roy Gardner would step out of his energy sector job and into Mackay's shoes by the summer of 2006.

The shake-up among contract catering top brass went beyond Compass. October saw former chairman of Avenance Tim West announce that he would move to Lexington at the beginning of 2006, filling the post of chief executive. In the same month, reports reached Caterer that former Aramark UK chief executive Bill Toner would join Host Management as commercial director.

On the Road

Suitors for the Compass SSP portfolio included Simon Heath and Lawrence Wosskow. The two founders of the Out of Town restaurant group had earlier snapped up the Little Chef chain, paying Permira more than £52m. The October sale triggered immediate price cuts at the roadside operation.

Meanwhile, companies bypassed rules that banned branded roadside signage. In May, Kentucky Fried Chicken sidestepped the Highways Agency ad ban by teaming up with Welcome Break. Earlier the same month, Roadchef and Costa Coffee had announced a similar deal.

Heathrow hell

The Gate Gourmet standoff at Heathrow Airport gripped the contract catering industry over the summer. The saga began with a workers' vote in June to determine whether staff would accept cuts in wages and benefits to save jobs. The company claimed that without drastic action it would face financial collapse after missing debt repayments.

The impasse turned nasty in August when 500 workers were sacked on the spot by BA's caterer.

Talks between the T&G union and the in-flight caterer ensued for four months. In the meantime, a tweak to its BA contract reportedly saved Gate Gourmet from going into administration.

At the end of August came an offer of voluntary redundancy, which was taken up by 700 employees. By December, the first sacked workers had returned to work. They signed undertakings not to take legal action for their earlier dismissal, and a further 144 workers were expected to do the same.

Contracts of the year

February

  • ESS Two-year deal for five North Sea oil rigs - £2.75m (annual turnover)

May

  • Sodexho Prestige 20-year contract at Great Leighs racecourse, Essex - £7m

  • Chester Boyd Five-year contract at CBI conference centre, London - £10m

  • Charlton House Three-year contract with T-Mobile, UK - £5.5m

  • BaxterStorey Three-year deal with GlaxoSmithKline, UK - £6m

June

  • Harrison Catering Carphone Warehouse, UK - £1.5m

August

  • Aramark Ministry of Defence (MoD) multi-activity contract, Hampshire - £20m

October

  • Sodexho 10-year MoD multi-activity contract, North Yorkshire - £20m

  • Skychefs Three-year deal with Thomsonfly - £26m

December

  • Avenance Seven-year MoD multi-activity contract, UK - £10.14m

The year in contract catering

January

  • Compass Group's Mike Bailey and Sir Francis Mackay turn down bonuses for 2004.

February

  • TV programme Jamie's School Dinners launches on Channel 4.

  • Initial re-enters the state school market after bypassing pension fund obstacle.

  • LACA attacks Government's school food proposals as vague and long overdue.

March

  • Initial bans staff from talking to press about school food.

  • Sodexho and Compass set 55p spend per head lower limit for ingredients.

  • Bill Toner quits Aramark. Andrew Main moves from the USA to replace him.

April

  • Gate Gourmet asks for rescue plan with creditors.

  • Compass issues second profit warning in seven months.

  • Government pledges £220m to improve school food.

May

  • Government sets up School Meals Review Panel.

  • Chairman Sir Francis Mackay announces he is to leave Compass.

June

  • LACA warns that fall in school meal uptake may cost catering staff jobs.

  • Rentokil Initial announces big fall in profits.

July

  • Don Davenport retires as Compass UK & Ireland chief executive.

  • Tim West resigns as chief executive of Avenance UK.

August

  • Industrial dispute at Gate Gourmet after company sacks 670 workers.

  • Government reveals cash allocations for local education authorities.

September

  • Long-running Gate Gourmet dispute ends.

  • Centrica chief executive Sir Roy Gardner replaces outgoing chairman Sir Francis Mackay.

  • Caterer survey reveals that old kitchen equipment could hamper push towards better school food.

  • Peter Aldrich, chief executive of Compass Group UK and Ireland, leaves.

October

  • Little Chef sold to Out of Town restaurant group founders Lawrence Wosskow and Simon Heath.

  • Compass Group division ESS suspended by UN as registered contractor after alleged procurement irregularities.

  • Former Avenance chairman Tim West joins Lexington as chief executive.

  • Heat turns up on Compass chief executive Mike Bailey after third profit warning.

November

  • Mike Bailey exits Compass.

  • Compass sacks UK and Ireland chief executive Peter Harris following UN investigation.

  • Contract caterer Restaurants at Work taken over by six-strong consortium.

December

  • US government launches investigation into Compass deals in Sudan.

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