London Daily

Focus on the big picture.
Friday, Jun 20, 2025

World's biggest contract catering company Compass sees 'significant new business opportunities' ahead

World's biggest contract catering company Compass sees 'significant new business opportunities' ahead

Before COVID-19 struck, Compass Group was serving 5.5 billion meals a year around the world but, as governments around the world introduced lockdowns, it faced a calamitous collapse in business as workers and students were sent home.

Few big companies suffered the impact of the pandemic as severely as Compass Group.

Before COVID-19 struck, the world's biggest contract catering company was serving 5.5 billion meals a year around the world, not just for big business clients like Nike, Shell, Google and Coca-Cola, but also for big government bodies such as the US Pentagon, thousands of schools, colleges and universities around the world, and sporting institutions as varied as the All-England Tennis Club, Twickenham Stadium, Aintree racecourse and Tottenham Hotspur FC.

The rapid spread of coronavirus, therefore, put thousands of the company's employees on the front line - it employs around 480,000 people across 44 countries - at risk. Then, as governments around the world introduced lockdowns, it faced a calamitous collapse in business as workers and students were sent home.

Because Compass's financial year ends in September, the company never actually reported a loss due to the pandemic, but it did suffer a big drop in profits in the 2019-2020 and 2020-21 financial years.

Today, though, brought signs that the business is returning rapidly to pre-pandemic levels of performance.

For the six months to the end of March, Compass achieved an underlying operating profit of £673m, compared with £287m in the same period a year ago. Headline pre-tax profits for the period came in at £632m compared with £133m a year ago.

Sales on an underlying basis were up by just under 38% to £11.6bn.

Better still, the company said it expects sales this year to grow by around 30%, compared with the previous range of 20-25% it had given, while it has also unveiled plans for a £500m share buy-back programme. The shares rose by more than 10% at one point on the news.

Dominic Blakemore, the chief executive, said the company had enjoyed a record number of new business wins during the period and had enjoyed record retention rates among existing clients.

He added: "We continue to recover strongly from the pandemic and have achieved the important milestone of revenue exceeding our pre-COVID level on a run rate basis.

"We have seen a notable improvement in business and industry and education as employees return to the office and students to in-person learning."

"We should have a right to be at higher levels of growth"


Mr Blakemore said he expected the net new win rate to continue into the second half of the year - having won some £550m worth of new business during the first six months of the year.

He said that, through COVID, the company had kept on all its salespeople and so had not struggled to win new business as economies had reopened around the world. The company also stepped up training and said it was enjoying better good will and trust from customers.

He went on: "We can sustainably perform better than we have before.

"What makes me most excited is that…we should have a right to be at higher levels of growth."

Inflation remains a headache, but Mr Blakemore said the company was confident of mitigating cost increases, suggesting inflation might even be a boost for the long term if it encouraged more people to think about outsourcing their catering operations.

Some 30% of the company's contracts are fixed price and, although inflation had been running ahead of the 5-6% price increases Compass has recently pushed through, Palmer Brown, the chief financial officer, pointed out that the company's profit margin had actually improved during the period through initiatives such as trying hard to reduce food waste.

He added: "We have to continue doing what we're doing and work even harder we have the capabilities to do it and the confidence that we'll be able to handle things."

It was not all good news. Along with sport and leisure, business and industry - the biggest of the company's five business segments by sales - remains at pre-pandemic levels - and questions remain, with many employers clearly struggling to get employees back to the office, how quickly that will be able to pick up.

War for talent making it difficult to get employees back to office


Mr Brown said: "It's by far the slowest sector to recover, it's really the only sector that's meaningfully below 2019 levels at around 83% or so currently, but we're getting increasingly comfortable on the fact that it will recover.

"However, it will look different than it did historically. We're seeing a shift away from working in the office on a prolonged bases - it's gone from somewhere around 4.2 days or work in the office to three and a quarter.

"That's in a state of flux - we know many of our clients are wanting employees back in the office, but the war for talent is making it somewhat difficult at the moment."

But he said there were nonetheless "significant new business opportunities" in business and industry coming through from other avenues, such as micro-markets and the fact many employers offer 'pantry' and free food offers to employees. He said that even traditional workspace cafes were seeing growth even though workers were not back in the office to the extent that they were before the pandemic.

Those kinds of details may provide some kind of comfort for investors that the company is capable of returning to pre-COVID levels before long in all parts of its business - even if workers do ultimately switch to hybrid working on a permanent basis.

But Mr Blakemore's ambitions go way beyond that. One slide in the investor presentation today noted that the addressable global food services market is worth at least £220bn, of which, Compass has around 10%. The market remains dominated by so-called 'self-operated' players in charge of their own workplace catering who have yet to think about trying to save money by outsourcing.

Push towards net zero could bring further impetus for outsourcing


Further impetus for outsourcing could come from further government regulations around the world and the push towards net zero. Compass also sees opportunities in vending and in food delivery and from employers enabling employees to order their meals via an app or a digital kiosk.

In other words, while serving millions of meals every day may sound to some like an unglamorous activity, there is plenty of innovation going on and plenty more that will be made possible by digitisation.

As Greg Johnson, the travel and leisure analyst at broker Shore Capital, told clients today: "The key…is the potential for a sustained acceleration in net new business growth, more than compensating for any structural shortfall from working from home, with broader inflationary pressures a further succour to first-time outsourcing."

Shareholders in this big, structurally important company - a rare UK world leader in its field - will certainly hope so.

Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×