People
Graeme Smith
Partner & Managing Director, EMEA Leader, Risk Advisory
London
Last week we hosted our annual Foodservice seminar for more than 300 leaders from the Foodservice industry. Coming at the start of the second UK national lockdown the seminar touched on a number of interesting areas including how the sector had responded to the crisis, the future of the office and the views of leading independent operators on the future.
The Foodservice industry had to react quickly in 2020 through the lockdown period. As revenues fell operators responded by:
- cutting costs and using the furlough scheme to keep staff connected to the business;
- raising capital by tapping their public or private shareholders or government backed schemes for additional funds;
- focusing on cash by raining in capital spending and seeking accommodation from creditors; and
- safeguarding their credit position by reaching agreement with their banks and lenders to provide breathing space to trade through – the four C’s if you will.
There is optimism that 2019 revenue levels will be reached again in 2022, an optimism that has been boosted by the positive vaccine news this week.
There is also confidence that the days of the office are not numbered. The workplace will change to reflect modified working practices but also it will develop to become a more important collaboration space. CBRE expect to see a space grab in London from growth sectors such as tech and fintech in London, helping to replace reduced space needs from traditional sectors such as finance and retail. The changes anticipated offer a great opportunity for caterers to play a part through their hospitality skills in this evolution.
Despite the current disruption, the large caterers appear particularly well equipped to deal with the challenges ahead. While disruption can often create a flight to perceived safety, those that invest in technology and systems to provide reassurances around cleanliness and controls will see positive outcomes. Diversifying revenue streams alongside this investment can help to offset losses elsewhere.
This raises the prospect of M&A consolidation providing a win for both the large groups and the independent operators. A merger with a large group can provide the independent operator with access to technology, systems and capital, while the larger group can benefit from the client relationships and operational skillset of the independent. This combination offers the prospect of more accelerated growth under a new umbrella when the market inevitably recovers. Wendy Bartlett spoke passionately about the benefits of the business combination for both her clients and her team following the merger between Bartlett Mitchell and wsh. We expect both traditional caterers with strong expertise in attractive niches and tech-enabled models to be of particular interest going forward.
Great service and innovative food remain at the heart of the Foodservice industry – however, the rules of the game have fundamentally changed due to differing patterns of local and sector shutdowns and the prevalence of home working.
Nevertheless, as we saw last week, the catering sector is remarkably resilient and adaptable. Changes in demand can be addressed through the use of pop-ups and more flexible labour and supply models. However, this need for agility adds greater challenge and will keep smaller and larger companies on their toes for the foreseeable future.
