Chris Durant, Senior Consultant at The Litmus Partnership explores the benefits and challenges of global catering contracts.
Can global catering operations benefit from a common catering policy and consistent approach in spite of cultural and political differences?
In spite of the obvious challenges, in theory at least, all global organisations can benefit from a common catering policy and a consistent approach to management and reporting including improved, shorter lines of communication, consistent budgeting, planning and performance measurement – all enabling easier identification and benchmarking of costs and trends across their estate. However, while a global supplier agreement can deliver significant benefits, a ‘one-size fits all’ model for catering around the world is highly unlikely to work. Instead, companies need to focus on establishing a common framework and set of guidelines, which allow for a degree of local autonomy to manage local needs. Additionally, global contracts require the development of strong supply partnerships, where relationships are based on more than just price and embrace the benefits of true collaboration.
Traditional contract deals are often based on self-interest achieved at the expense of others. To work effectively, both clients and contractors need to move away from this outdated thinking to achieving a contract model based on true win/win principles, where all parties have a vested interest in making the relationship work. This can only happen when all parties have established objectives that are fully aligned. Clearly these principles should be the basis for all outsourced contracts but it takes on even more importance when dealing with operations, which may be thousands of miles apart.
Looking ahead, change in global outsourcing practice and contract management will continue, initially in the mature markets but longer term in other parts of the world as countries play catch up and even overtake more established markets – cost pressures, environmental issues, skill shortages and corporate downsizing will be some of the bigger challenges. Very importantly, FM companies will develop a better understanding of catering services and an appreciation that they are different from other services and require a unique approach.
In conclusion, foodservice caterers have generally been highly responsive to changing markets and trends but will need to find even more innovative solutions to meet the needs of a shrinking world and ever more demanding clients and customers. The right solution today will not necessarily be the right solution tomorrow.
Ultimately, global catering contracts can provide the perfect foundation for sharing best practice, fast tacking efficiencies learned from more mature markets and engaging with local management in ways that help them play a part in developing the right catering service for their employees.
Inevitably the more mature and established European and US contract catering markets, where outsourcing of services is generally higher than many other parts of the world, have moved away from traditional staff catering models.
Effectively sourced, structured and managed global contracts can deliver a range of valuable benefits to companies but while many global organisations have talked about entering into worldwide catering agreements, relatively few have really progressed beyond a vision. This is perhaps not surprising given the challenges of cultural and political differences (both external and internal), differing regional and country laws and the way in which employee and welfare benefits are perceived.
Inevitably the more mature and established European and US contract catering markets, where outsourcing of services is generally higher than many other parts of the world, have moved away from traditional staff catering models. Perhaps the most significant feature in the UK is the erosion of client subsidies and the growth (as in the US) of nil subsidy contracts. This is in striking contrast to many other countries.
In Europe, works councils representing worker interests are common. They form a strong part of German and French work culture, requiring employers to consult on a diverse range of workforce related matters, including employee catering. The practical implications for caterers are that planned service changes may have to be agreed by works councils first and delays can cost the caterer or the client organisation money. In Germany, for instance, the strength of works councils makes the current high levels of catering subsidy hard to reduce or remove.
Looking further afield, in Latin America, employee catering is heavily subsidised. In Brazil, it is estimated that over 10% of workers receive vouchers to buy not only meals at work but also everyday items like childcare, fuel and supermarket products. These vouchers are clearly seen as a major welfare benefit and are 80% employer funded or more, so nil-subsidy catering doesn’t even register on the catering agenda. Despite this, the South American foodservice market and Brazil in particular is developing rapidly and some countries have elements of European business culture although labour laws in most are poor compared with Europe.
Economic giants like China and India have shown strong growth and the potential for further outsourcing is high. China has no specific regulations relating to workplace catering but blue collar catering tends to be heavily subsidised. However, in big cities employees pay a larger amount of the cost, and food preferences are diverse. Longer term, subsidies are likely to reduce as the Chinese economy continues to expand and people become better off. Elsewhere in the region, in India, employers of over 250 people must have a staff restaurant by law. This potentially provides a wealth of opportunities for global caterers as fledgling companies and the Indian economy grows.