In 1989, catering contractors showed extraordinary leadership. At a meeting in Kenley, the headquarters of Gardner Merchant, then the industry’s largest contractor, twenty companies agreed to pool quite sensitive commercial information on their food service businesses. The aim was to provide an annual picture of the growing size and significance of the contract catering sector primarily for investors and financiers but also to raise the sector’s profile as a career path for young people. It was a step that had not been taken before by any other sector of the industry, and certainly not since.
So the annual Contract Catering Survey, which became the Food and Service Management (FSM) Survey, was born.
At the meeting were the leaders of the major contracting companies Charles Allen of Compass, Garry Hawkes of Gardner Merchant, Don Davenport of Sutcliffe as well as heavyweight independents such as Marc Verstringhe and Jim Cartwright – household names all in the industry. Although they fought each other tooth and nail commercially and might not have been best friends, they were an enlightened bunch. The decision they made paved the way for contract catering to be regarded as a discrete but highly significant sector of the hospitality industry, with its own business and career opportunities; it may be no coincidence that Compass is now the largest food service company in the world.
We must confess an interest here: both of us were deeply involved in the subsequent 23 annual surveys organising them through the British Hospitality Association. The surveys were never perfect but they showed the growth, year on year, of a sector that is now a £4bn-plus industry and one which gives untold opportunities to the businesses now operating in it. As the recent publication, Service on a Plate* shows, contract catering has spawned more millionaires than any other sector of the hospitality industry. Its success cannot be denied. This was largely due to the leadership displayed by contractors.
The point of this walk down memory lane is to ask where are the hospitality leaders who would make a similar decision today? Where are the leaders who knew the industry backwards because they had been apprenticed in it and who led it during its period of huge growth? Sure, we have celebrated chefs, some of them leading large-ish companies, but where are the likes of latter day giants like Charles Forte or Max Joseph or Hugh Wontner who led (not always successfully, admittedly) major hospitality enterprises and were household names in and out of the industry?
You would need to be a hospitality wonk to be able to name the chief executive of Whitbread or any other major hotel or restaurant company. Even Whitbread’s main board (Premier Inn is by far the UK’s largest hotel and coffee shop brand) lacks anyone with any hospitality background; it’s probably not the only one. The name of the chairman of the BHA (incidentally, Nick Varney of Merlin Entertainments – both respected in their own sphere) would be recognised by only a few in the hospitality industry. The Institute of Hospitality has a new president in Alastair Storey, ironically one of the most successful of food and service management operators, but even he will find it difficult to revive the IoH’s flagging fortunes.
The industry, successful as it is, appears rudderless. In larger matters BHA, which abandoned the FSM survey in 2014, is concentrating on its Big Conversation programme yet it continues to spend time and effort trying to convince the government that the serviced accommodation sector needs a unilateral reduction in VAT. It won’t happen and six years of pleading have got nowhere yet. In fact, the opposite might happen as the rumblings of local authorities considering the introduction of a bed tax grow stronger.
With Brexit around the corner, the industry is vulnerable on other issues. Any reduction in migrant workers will lead to even greater labour shortages than now. The National Living Wage is due to rise to £9 an hour by 2020 but other pressures – rising pension costs and the impact on differential rates – will be just as onerous. Can prices rise to cover these huge costs? In some cases , yes, but the industry needs to negotiate a deal with government on work visas so that even greater labour shortages do not lead to unaffordable wage demands in the future. There are plenty of comments in the press about the need for agricultural migrant workers but few mention hospitality’s needs. At the same time, employers will surely need to increase productivity to make the best of what labour they have – a major challenge for any service industry. Where is the leadership on these key issues?
Not least by any means is any attempt to heal the industry’s running sore: the need for the transparent distribution of the service charge and the illegal underpayment (by some well-known establishments) of the minimum wage. There has been a deafening silence on these issues despite the fact that they remain a positive deterrent to recruitment and retention – and damage hospitality’s reputation as a professional employer.
There are reasons for this silence. Hospitality now comprises a large number of companies, many of them franchisees, who have little or no background nor a long-term interest in the industry; they see hospitality as an opportunity investment. The industry’s plethora of brands are largely owned (and even operated) by investor funds or financial interests with no direct hospitality background. These companies are typically sold on to yet other investors when sufficient returns have been realised and their value has appreciated.
So, coming back to 1989, where today is the leadership and decision-making that was exercised by contractors then? Where are the determined and dedicated leaders who understood the industry’s priorities and challenges, had the will to tackle them and, crucially, spoke up for the industry? Yes, there are many successful companies, and the industry is even on a roll, but collective leadership in the industry seems a distant memory. Hospitality will surely suffer for the lack of it.
Bob Cotton was chairman of the Contract Catering Form from 1988-2000 and chief executive of the BHA 2000-2010; Miles Quest compiled the Contract Catering Survey (later Food and Service Management Survey) 1989-2012.
Article by Bob Cotton OBE