New research on the Contract Catering market published by Apex Insight reports a more stable market and mixed views on bundling with other services

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Having been a leader in outsourcing, the UK contract catering market is now relatively mature and many leading providers have responded by bundling catering with other FM services. However, both customer views and company performance suggest this strategy is not yet proven.

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Customers divide between those who are keen on catering being part of a bundled service and those who prefer it kept separate.

This market report by Apex Insight describes how the industry was impacted by the economic downturn with the 2009 fall in employment leading to fewer people in the workplace requiring to be fed. While outsourcing remains an important driver of market recovery and growth, its level, and hence impact on market growth, varies by sector. Business and Industry is mature but there is more potential in other areas such as Education, Healthcare and Local Authorities.

Although industry volumes have suffered in this environment, the Apex Insight study finds that companies were able to increase prices. Above-inflation increases in food costs have been passed on to customers, who largely accept this and expect it to continue in future. Hence margins have been stable across the industry, in spite of the economic downturn

Catering has continued to converge with facilities management. Many of the leading catering companies now offer additional services, enabling them to increase revenue per contract – the key industry value driver – while leading FM groups and integrated service providers increasingly include catering as part of their bundled service offer.

Customers interviewed by Apex Insight split between those who are keen on the idea of catering being part of a bundled service and those who see value in keeping it separate. Some customers report it gives them cost savings and efficiency benefits, in particular from having a single point of contact for all services. However, others feel that an integrated provider, especially one which lacks the capabilities to self-deliver catering services, does not add enough value to justify its management fee, or that catering, being more important to staff morale than other services, is worth leaving to a specialist.

The largest operators are Compass and Sodexo. Both of these companies have continued to expand their service offer to include a wide range of non-catering services and are now major international operations with presence in many countries. However, the fastest-growing of the leading companies has been BaxterStorey. In contrast, it has retained its focus on UK catering, winning a series of high-profile contracts from incumbent competitors.

Future growth in the contract catering market appears likely given the further potential for outsourcing. In setting out its forecast for the market, the report takes into account the different conditions in each of the main segments. For example, in the Business & Industry segment, changing workforce trends, such as increased part-time and home working, are reducing the impact of recovery in private sector employment levels. In Education, demographic trends have led to school numbers to increase, but some observers expect increases student numbers to stall given recent changes in university funding. And in Healthcare, demand for residential care continues to increase with an aging population, but funding of care remains a challenge.

The full market report: “UK Contract Catering: market insight report”, which includes insights from interviews with customers, profiles of the leading players as well as growth forecasts for the market and its key drivers, is available from

About Apex Insight
Apex Insight is an independent provider of research, analysis and consulting services covering business services markets in the UK and Europe. In addition to Contract Catering, it has recently published market reports covering sectors including Integrated Facilities Management, Security, Pest Control, Waste Management, Call Centres, Tool & Equipment Hire, Express Parcels and Vehicle Leasing.

Companies mentioned in the report
Compass UK & Ireland
Initial Catering Services
Baxter Storey
Bartlett Mitchell
Cygnet Foods
Harrison Catering Services
Host Contract Management
Lexington Catering
7 Day Catering
Lindley Catering

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Frank Proud
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