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| KN55009 |
| KEY NOTE CONTRACT CATERING JUNE 1999 |
| Overview |
ISBN 1-85765-690-3
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Executive Summary Table of Contents
Back to Hotels and Restaurants IndexIn 1998, the UK contract catering market was
estimated to be worth £2.65bn at retail sales prices (rsp), a substantial
17.4 percent increase on the 1997 value. Growth in the market has been driven by two
main developments: the increased penetration of contract catering outlets
across most core market segments; and the diversification of many contract
caterers into other business support services, such as cleaning, security and
maintenance.
The largest market sector is the traditional business and
industry market valued at an estimated £1.33bn in 1998, and commanding
50 percent of all contract catering sales. All sectors of the market have been growing
over the last few years, but growth in the business and industry sector has
been smaller than in most other sectors and its share of the total market has
been falling steadily. The main growth areas have been education, healthcare,
and catering for the public. In 1998, the second largest sector was education,
valued at £557m, or 21 percent of the market. Other core sectors are healthcare
and catering for the public, valued at £266m each (10 percent share each), and
other contract catering , at £236m (9 percent). The latter category includes
catering at government sites, offshore locations, training and construction
sites.
Other measures of the contract catering market, such as number of
meals served and number of outlets, again emphasise the importance of the
business and industry segment, although its share of the market continues to
fall. In 1998, for example, there were an estimated 18,151 contract catering
outlets and outlet numbers have increased by 3,237 between 1994 and 1998. The
largest group of outlets, 46.3 percent, is in the business and industry sector, but
its share of total outlets has dropped from 74.7 percent in 1991.
Growth in the
industry has been accompanied by increased concentration and, by 1998, the top
three contract caterers accounted for an estimated 85 percent of all UK sales. These
three companies, Gardner Merchant, Granada, and Compass, have expanded through
a combination of acquisitions and organic growth, with UK growth for Compass
and Gardner Merchant being part of a global expansion programme. The fourth
largest supplier, Aramark, is the only other company to generate annual sales
of £100m or more and these four companies claim over 90 percent of the UK
market.
While the larger companies increase their hold on the market, and
take a growing share of the large catering contracts, there has also been
considerably activity at the lower end of the industry. Strong growth in the
market, coupled with the relatively low entry barriers at the bottom of the
market, have encouraged many smaller operators to enter the catering market.
Overall, market growth over the next 5 years is likely to be below the
growth achieved in the previous 5 years. In 1999, Key Note is forecasting an
increase in sales of 7 percent, producing a market valued at £2.8bn. By 2003,
the market is forecast to reach £3.2bn.
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Text © 1999 Key Note
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Last updated by Jacob van Eldik 22th January 2000