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Toughest year in a decade for contract caterers

28 February 2006
Toughest year in a decade for contract caterers

Contract caterers have faced their most challenging year in a decade, according to the British Hospitality Association's annual survey on the sector.

The Food and Service Management Survey 2006, which was published today at the Royal Garden Hotel in London, showed a 2.3% drop in the number of catering outlets to 17,608.

This fall led to a decline in turnover of 0.8% to £3.86b; a 2.1% slump in the number of meals served to 1.57 billion; and a decline in staff numbers with the sector employing 120,335 staff, 2.8% less than in 2004.

Phil Hooper, chairman of the BHA food and service management forum and corporate affairs director at Sodexho, said: "2005 was the most challenging year for a decade for the industry."

But he added the sector would continue to be under pressure with key challenges, including the shifting risk burden to contract caterers, pressure on margins, sluggish growth and staffing issues.

Last year saw the number of total risk and profit-and-loss concession contracts doubled to 6,164 to account for 35% of the total.

This means that 70% of contracts involve some element of risk for catering companies, compared with 10 years ago when most contracts were cost-plus.

The pressure on caterers to increase prices to business and industry customers to meet clients' demands for lower subsidies, has led to a greater drive to increase revenue per customer.

The report said that this had seen the rise of more concepts based on healthy options, which now make up 40-60% of dishes on caterers' menus.

The report also showed that although overall staff numbers fell (except part-timers), labour costs grew by 2.8% to £1.78b.

The full report is available from the BHA for £50. Visit www.bha-online.org.uk for more details.

By Angela Frewin

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