In 2003, the UK contract catering and foodservice market was valued at £3.78bn at current prices, with sales increasing by just 2.3% on the previous year. Growth in the contract catering and foodservice market is still outperforming value in the catering market as a whole, despite the fact that market growth in the former sector was the lowest for 5 years in 2003.
The most established and also the largest sector is business and industry. However, this market is a relatively mature one and penetration of contract caterers and foodservice management companies is high. As a result the market has shown little growth in 2003.
The second-largest market sector is education from nursery level, through to schools, universities and colleges. In 2003, the sector experienced just 2% growth at current prices, mainly due to the first decline in the number of contracted-out catering outlets in schools since 1997. Better performing sectors in 2003 have been healthcare, public catering and other contract catering and foodservice management.
The healthcare market increased sales by 3.5% in 2003. This was lower than the previous 4 years but still better than the market as a whole. Public catering was one of the two strongest performing sectors, as more catering concessions and company-owned outlets were opened in more locations. The highest sales were recorded in the other contract catering and foodservice management market where growth in 2003 was 6.1% at current prices. Defence and offshore markets were particularly buoyant.
Caterers are having to respond to changes in lifestyles, working patterns, and eating habits. Traditional staff restaurants offering hot-plated meals are declining, while outlets and vending machines offering snacks, sandwiches, and light meals are rising. As well as moving increasingly into public catering, operators are also developing retail outlets and retail services alongside catering concepts. Multi-service contracts, encompassing a range of support services such as cleaning, reception duties, grounds maintenance, security, laundry as well as catering, are also growing.
The leading players in the UK industry are all part of global foodservice or facilities management companies and concentration in the sector continues to increase. The top four companies - Compass, Sodexho, Aramark and Avenance - have increased their share of the market. Many of the larger companies, outside the top four, have also experienced strong sales and profits growth in the last few years. Barriers to entry are low, particularly at the local level, so there are also opportunities for smaller companies to emerge and grow.
Key Note is forecasting low single-digit growth in the market in the next 5 years, with the strongest growth prospects expected in the sectors currently witnessing the best growth: public catering, healthcare and other markets.
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