Activities
Since 1991 Compass has grown from a £250m UK business into the world’s largest contract caterer. Its absorption of the Granada foodservice businesses in 2000 shot it from third to first position in the UK market (and briefly made it the UK’s biggest hotel company too). Today its UK and Ireland division serves more than three million meals a day.
The group divides its operations into six key markets, each served by a wide line-up of subsidiary brands (some of them joint ventures). They include:
Business and industry:
Eurest, Baxter & Platts, Everson Hewett, Quadrant, Shaw Catering, Summit Catering
Fine dining
Restaurant Associates, Roux Fine Dining, Leith’s, Flik (USA), the Patina Group.
Specialist markets
- Education: Scolarest, Chartwells
- Healthcare and old people's homes: Medirest, Morrison (USA), Crothall (USA), Clinic Catering Services (Germany)
- Defence, offshore and remote-sites: Eurest Support Services
- Facilities management: ESS Support Services Worldwide
Retail and travel
The group has retained some travel concessions in Italy, Japan and Portugal following the 2006 sale of its Select Service Partner travel concession business and its Moto motorway service areas.
Sports and leisure
All Leisure, Letheby & Christopher, Payne & Gunter, Circadia, Leith’s, Milburns, P&C Morris, Langston Scott, Peter Parfitt, Keith Prowse, FMC, Leisure Support Services, Select Service Partners, Levy Restaurants (USA)
Vending: Selecta (Europe), Canteen Vending (USA)
Compass also operates a range of different brands and concepts.
Owned brands and concepts: Upper Crust, Harry Ramsden’s, Caffé Ritazza, Taste, Naples 45, Cucina & Co , Profiles (foodservice), Delimento (retail), Choices, WorldMarché, Amigo. (Some will now operate under franchise in offices and universities following the sale of Select Service Partners in 2006).
Franchised brands: Burger King, Sbarro, Krispy Kreme, Marks & Spencer Simply Food.
Timeline
- 1941: Jack Bateman founds Factory Canteens to feed British munitions workers promised one hot meal a day by law.
- 1960: Grand Metropolitan buys Bateman and Midland Catering to create Grand Metropolitan Catering Services. The business is relaunched as Compass Services in 1984.
- 1987: Compass Group is formed after a management buy-out that is the UK’s largest to date. The company floats on the London Stock Exchange a year later, in 1988.
- 1991: Compass has grown into a £250m UK-based business.
- 1992: Compass launches The Right Direction, a client-driven strategy using sector-focused subsidiaries and foodservice branding. Letheby & Christopher and Travellers Fare join the group.
- 1993: Compass buys Select Service Partners from SAS Airlines and acquires Roux Fine Dining.
- 1994: The group moves in the USA with the acquisition of Canteen Vending in the USA.
- 1995: Compass buys Eurest International (including Leith’s) from Accor.
- 1997: Compass acquires SHRM, France’s fourth largest caterer and a major player in the health and education sectors.
- 1998: Compass clinches its first global foodservice contract (with Philips), joins the FTSE 100 Index, and buys Restaurant Associates.
- 1999: Compass acquires Patina, P&O foodservice contracts in Australia and a 50% shareholding in GR Brazil.
- 2000: Compass buys My Lunch and Riall of Italy.
- July 2000: Compass completes an £18b merger with Granada Group to create two temporary divisions - Granada Media and Compass Hospitality, which now comprises the merged foodservice businesses, roadside restaurants, motorway service areas, and the former Forte hotel estate. Compass now has an annual turnover of £7.5b and profits of £914m.
- September 2000: Compass buys a 49% stake in sports and entertainment caterer Levy Restaurants for €87m.
- October 2000: Compass launches an auction for the Forte hotels after talks with Accor to buy the whole package break down. In December, it sells the Cumberland hotel in London to the De Vere Group for £60m.
- February 2001: Compass demerges from Granada and is relisted on the Stock Exchange. During the year, it buys museum caterer Milburn’s, Selecta Europe and Crothall in the USA.
- March-May 2001: Compass sells London’s Cumberland hotel to Japanese investment bank Nomura for £150m in March. In April it sells 48 Heritage hotels to Macdonald Hotels for £235m, 79 Posthouse hotels to Six Continents for £810m and London’s Regent Palace and Strand Palace hotels to London & Regional Properties for £105m. In May, Nomura buys 124 Le Méridien hotels for £1.9b. This completes the Forte flog-off, which raises a total £3.36b.
- 2002: Compass buys Seiyo Foods in Japan.
- 2003: In February, venture capital firm Permira buys the 220-strong Travelodge chain, along with 368 Little Chef roadside restaurants, for £712m. Compass buys Wimbledon caterer FMC and Millies’ Cookies. Restaurant Associates links up with celebrity chef Gary Rhodes to open Rhodes Twenty-Four in Tower 42 in London, which wins a Michelin star in 2005.
- 2004: Compass buys B&I caterer Everson Hewett and corporate hospitality firm Keith Prowse.
- May 2005: The group announces the sale of its 75% stake in US high-street bakery Au Bon Pain for $90m (£49m).
- October 2005: The group’s ESS division is suspended as a registered contractor for the United Nations, which launches an investigation into allegations of corruption surrounding the award of contracts.
- September 2005: Compass announces plans to sell its UK and European travel concessions business Select Service Partners (SSP) in order to focus on its core contract catering business. SSP includes more than 2,000 catering and retail units in more than 600 railway, roadside and airport sites in 26 countries.
- November 2005: Following an internal investigation, Compass sacks three executives (including former ESS chief executive Peter Harris who became boss of the UK and Ireland division this July). In February 2006, the group admits there were “serious irregularities” with the UN contracts which it attributes to specific individuals.
- December 2005: Compass completes the management buy-out of a 90% stake in its European Inflight catering operation for £57m.
- January 2006: Compass announces plans to exercise a put option to buy the remaining 51% stake in Levy Restaurants in the US for $250m (£143m). The transaction completes in April..
- March 2006: Compass is hit by two US lawsuits from companies who claim it used sensitive information on rival bids to win UN contracts. Swiss-based Supreme Foodservice sues for $125m (£72m) and Monaco-based ES-KO for $902m (£517m)
- April 2006: Compass sells its roadside and travel catering business for £1.82b in two transactions that complete in June. Australia’s Macquarie Bank buys 43 Moto motorway service areas for around £600m while private equity group EQT buys SSP for around £1.2b (including Creative Host Services in the USA, which was not part of the original auction). Compass retains some travel concessions in Italy, Japan and Portugal, along with the right to use SSP brands such as Upper Crust and Harry Ramsden’s in offices and universities.
Financial snapshot
Full year
Turnover: £12.7b (2004: £11.8b)
Pre-tax profit*: £171m (2004: £370m)
*Underlying profits (excluding goodwill, amortisation and exceptional items) fell to £581m from £645m in the previous year.
Half year
Turnover: £5.7b (2005: £5.1m)
Pre-tax profit: £184m (2005: £203m)
Financial year end: 29 November 2005
Half-year end: 31 March 2006
Operating data
Divisional turnover for the six months to 31 March 2006
UK: £1b (2005: £984m)
North America: £2.3b (2005: £1.9b)
Continental Europe: £1.5b (2005: £1.49b)
Rest of the world: £857m (2005: £684m)
Divisional operating profit for the six months to 31 March 2006
UK: £56m (2005: £61m)
North America: £125m (2005: £108m)
Continental Europe: £92m (2005: £100m)
Rest of the world: £25m (2005: £22m)
In the UK the group’s largest business sectors are business and industry (which accounts for 38% of turnover) and its retail, travel, sports and leisure concessions (40%).
Number of employees: more than 400,000 in more than 90 countries
Number of UK employees: 110,000
Strategy
"In the UK, I'm satisfied that we are making progress in implementing the actions necessary to create a solid platform for future growth. Trading in North America and the Rest of the World continues to be encouraging. In Continental Europe, as expected, trading conditions remain challenging.
We remain on track to deliver on our full year expectations."
Source: interim results statement, 16 May 2006
Chief executive
Richard Cousins
Key directors
Group
Chairman: Francis Mackay
Incoming chairman: Sir Roy Gardner
Commercial director: Chris Bucknall
Group finance director: Andrew Martin
CEO, UK and Ireland: Ian El-Mokadem
CEO, Europe: Miguel Ramis
CEO, France and Asia Pacific: Didier Coutte
CEO, Americas: Gary Green
Director of corporate policy and communications: Michael Young
Deputy chairman: Peter Cawdron
Executive director and group company secretary: Tim Mason
UK and Ireland
CEO, UK and Ireland: Ian El-Mokadem
Executive director sport, leisure and fine dining: Nigel Dunlop
Executive director, sales and marketing: Mike Oldfield
Executive director, business and industry: Chris Copner
Executive director, commercial: Trevor Briggs
Executive director, finance: David Mortimer
Executive director, human resources: Mike Burton
Executive director, UK procurement and supply chain: Nick Thomas
Executive director, communications: Lesley Potter
Cowley House
Guildford Street
Chertsey
Surrey
KT16 9BA
Tel: 01932 573 000
Fax: 01932 569 956
E-mail:
Website: http://www.compass-group.com
Under the chairmanship of Francis Mackay, Compass has led the move of contract catering from an institutional canteen culture into the modern animal it is today. Mackay spearheaded the use of high-street (and company owned) brands in the workplace, adopted the marketing techniques of the commercial world and was one of the first to expand into new areas such as railways and airports, sports venues and hospitals. The group also pioneered the use of sector-specific subsidies.
Compass has grown both organically and through a series of acquisitons, the biggest being the merger and demerger with rival Granada in 2000, which toppled Sodexho as the biggest UK player. The merger brought a host of new names and contracts into the Compass stable – such as Harry Ramsden’s, Sutcliffe Catering, Charters, Circadia, Quadrant, Momentum, Fairfield, Baxter & Platts, Shaw Catering, and Summit Catering. It created a food service business with a £4.79b turnover and a concessions business turning over £1.79b a year.
The buy also made Compass a market leader in hotels and roadside restaurants. But this dilution of a pure foodservice caterer did not please the investors. The group’s share price slumped by 15% on the news and Compass was forced to offload the hotels and the roadside business, retaining just the motorway service areas which it rebranded Moto.
It’s not the first time Compass has fallen foul of its shareholders. The company’s stock bombed in 1994 when the group moved into the USA and, in 2004, its share price plummeted by 35% to an all-time low of 213p on the back of a profits warning and a drop in operating profit that had investors baying for chief executive Bailey’s blood.
A number of key directors have since left or are leaving, and the group has announced plans to slash £50m off its costs by £50m by 2006 and conduct a root-and-branch review of its operations.
Despite this difficult climate, Compass was one of just two catering or hospitality companies to make the top 10 in the peer-reviewed Britain’s Most Admired Companies listings. It was voted 10th in the list of the UK’s top 220 companies across all industries.
