Is nil cost catering the ultimate goal?

Having occupied a senior client- facing role for many years, as a Business & Industry (B&I) caterer, I’ve spent an awful lot of time listening to the woes of those within facilities.

One of the incidents leading to my eventual transition to a life of giving independent catering advice to clients was when I invited three Facilities Managers out for a curry with me (glamour puss that I am).

It seemed to me these three like-minded people seemed awfully busy at fire-fighting most of each day, and most days, that some time-out to blow off steam with peers was in order. I was right.

It was not long into our spicy spectacular, post introduction, when all three ended up dropping into easy banter about the joys of facilities and shared experiences. It soon became apparent that I was the bystander. All three ended up apologizing to me frequently, throughout the meal, for what they believed to be ‘moaning’. To me, it was the best insight I could have had into a Day In The Life of a Facilities Manager.

The Life of a Facilities Manager

I came to fully appreciate a life in facilities was about being employed because you’re the ultimate organizer. You were employed solely to ensure your business met the needs of each and every one employed by that business.

You were about leading strategic planning and day-to-day operations. You were the one tasked to drive best practice to improve efficiencies (and reduce operating costs) for every single contributory service that supported the business: building and grounds maintenance, cleaning, communications, contract management, food safety, health and safety, mail, procurement, reception, recycling, security, space management, utilities, waste management and (pause for breath) … catering.

However, being the ‘go-to’ man or woman responsible for covering several departments and/or central services within a business brought with it huge responsibility and meant the role was often a thankless one.

Catering – of all the managed services – they all agreed, was often the nicest part of their role and day job. When you think about it, of course it is; it’s about food (and intangible emotions) rather than the physical disruptions (to your job) from a burst drain, a blocked toilet, a malfunctioning laptop or a fire alarm … all meaning that the needs of some employees were not being met by the business.

In fact, clients would often reiterate there was a reason why they employed the catering company … to prepare the documents, to project manage, to supervise, to investigate, to plan, to ensure continuous catering, to ensure minimal disruption, to direct, to coordinate, to comply with food safety, to comply with health and safety, to monitor service levels, to respond to emergencies and issues and, above all, to manage budgets, calculate and compare costs and to deliver value for money. Quite frankly, if they could do it themselves – for every service, they would.

What’s the relevance of all of this?

Irrespective of BREXIT going down in the history books, the way we act today in foodservices will define tomorrow’s foodservice sector. Facilities Managers continue to come under pressure to cost cut and need to rely on their caterer(s) to help them flex in response to changing market conditions. There will always be the need to cut catering subsidies as a result, delivering low or nil subsidy contracts. To the Facilities Manager, this may mean more emphasis on improved cost control measures, more calculating and comparing costs and more delivery of a value for money service. This is where Turpin Smale will provide an invaluable advisory or consultancy service to those within facilities and, notably, within B&I.

The Need for More Nil Subsidy

According to the British Hospitality Association, the total nil cost contracts recently reached 700+, an increase of over 20% year on year, though they still only make up less than 5% of the total market. Nil Subsidy or Nil Cost Catering generally translated to mean: the caterer recovers earnings and overhead costs from the gross profit earned from restaurant, café or coffee shop sales, at no cost or risk to the client.

With this said, it’s important that facilities managers, especially within B&I, understand how the success of nil subsidy agreements – depending on the contract – rely on: (1) the on-site head count or population of the building and/or (2) the nature and extent of the food service outlet or outlets (i.e. if you’re not doing so already, running an all-day service is a crucial consideration for making nil subsidy contracts viable) and/or (3) giving the incumbent caterer higher levels of autonomy to run the catering services and relinquish control (esp. of tariffs) so the caterer can deliver.

The biggest pressure caterers are facing right now is that of rising food costs; which are occurring across the board, let alone the impact of Brexit and the U.S. elections. Market sources claim that recent economic conditions mean this is the first time that fluctuating food costs cannot be solved merely by re-engineering the menus. This suggests that tariff rises may be inevitable in 2017.

Fortunately for caterers, food cost rises are highly visible, impacting on everyone from the supermarket to the high street. As a result, Facilities Managers are more likely to be understanding of the plight of caterers and more likely to agree to modest tariff increases but only if caterers demonstrate they can also manage a reduced catering subsidy.

If a Facilities Manager is considering the move to nil subsidy catering, they will look to caterers for advice, to take on more responsibility, in view of the uncertain economic situation. If the caterer is not proactive enough, then this is only an opportunity for me, as an independent consultant, and for Turpin Smale.

In terms of next steps for the facilities manager, really there’s no quick fix solution but you really do need to collaborate with your caterer and/or a food service consultant and think about a series of strategies that are relevant, reliable and timely to put in place to ensure subsidies are minimized and (if possible) eliminated.

Caterers need to consider this: if you’re not strategic and forward-thinking, given the uncertainty and demands of any climate, then the people you cater for every day will head to the high street which means it will be in the best interests of your facilities manager to look for another caterer to help: (a) manage catering budgets better, (b) calculate and compare costs, (c) deliver better value for money, (d) be better suited to driving best practice and (e) improve efficiencies (and reduce operating costs.