London Daily

Focus on the big picture.
Friday, Aug 22, 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
After 200,000 Orders in 2 Minutes: Xiaomi Accelerates Marketing in Europe
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
×