Does the risk lie in the finances or the relationship?
By Nico Prinsloo, Partner, Confab
There have been several interviews and written pieces over recent months regarding the future of contract catering, including what operators and consultants believe will influence our industry as we emerge out of the restrictions COVID-19 has placed on us.
Having started our business during the pandemic and been fortunate to work with our first client, it has become apparent that there is a theme emerging around some caterers’ lack of willingness to take on risk. This is totally understandable given the current circumstances, but will it be the caterers who are willing to take risks early on, not just in commercial contracts but across B&I contracts too, that will be most successful?
In the past, risk has been defined in P&L terms as a concession contract, nil subsidy, profit share or fixed price. More often, the risk sat squarely on the caterer and not the client, and subsequently influenced the quality of food that was put on the plate, the service, the choice and range on offer and the price customers paid. In some instances, to high, others too low.
Moving forward, I believe that the risk will be shared, and it will not be focused on the finances it will be focused on the relationship. A relationship that works needs to be transparent and it needs to be flexible, a marriage one would say.
Let us consider a high street outlet, whether a café, coffee bar or restaurant. Firstly, it’s all about investing in and building a facility to accommodate the offer and style of service. The size also needs to be relative to the expected volume of customers to make it commercially viable.
Secondly, the quality of the food, service and environment needs to deliver a complete meal experience and value for money. These elements combine to drive repeat visits, creating a long-term relationship between the operator and the customer.
So, how does this apply?
Having worked in contract catering for over 18 years, it was rare to see a true relationship between the client and the caterer. On the high street, successful operators’ welcome customers in and work hard to keep them. In contract catering, some caterers become complacent over time, they have a customer base and assume it will be there every day and if it is not, it’s the clients fault. On the flip side, clients naturally wanted all the choice available to their staff or visitors, deli bars, salad bars, coffee bars and numerous hot choices on the counter, without understanding the true cost involved. This created issues around deliveries, storage and wastage which is no longer viable given the environmental impact. In many cases, caterers were not paid an acceptable fee to reflect their efforts and thus needed to seek earnings elsewhere. These factors, amongst others challenged the relationship.
For a successful partnership, both parties need to be invested. Risk will be shared, and clients will understand the need to invest both time and money.
However, now more than ever clients understand that their staff and customers working, and socialising patterns will change significantly, and that the amount of time you are at your desk or in the office, may no longer be one of the key measures of productivity.
So, is there a new way of working that will emerge, focused on creating a relationship between client and caterer and therefore a shift in the risk profile?
For a successful partnership, both parties need to be invested. Risk will be shared, and clients will understand the need to invest both time and money. They will also need to give their chosen catering partner or partners, the responsibility and freedom to propose and shape an offer and facility that reflects the new way of working and is fit for purpose. The caterers will use their skills and expertise to invest in and create an innovative catering offer and environment that allows them to take on financial risk and deliver a profitable solution.
Lets-Confab was set up by John and me to help facilitate this relationship between clients and their chosen partner. We understand both side’s needs, but do not take a side. We apply our expertise and experience to bring both parties together to focus on a mutually beneficial, long-term, and profitable solution.
Like so many, I genuinely believe that we all cannot wait to get back into the office, to meet, collaborate, work side by side and socialise. We are all yearning to go to the pub, café, or restaurant, attend events or visit theatres, museums, and visitor attractions to fill the gaping hole that has been left because of COVID-19.
So, let us not focus on the transaction, let us focus on the journey and the outcome to make sure your business and our business comes out the other side of this stronger and more resilient.
“We human beings are social beings. We come into the world as the result of others’ actions. We survive here in dependence on others. Whether we like it or not, there is hardly a moment of our lives when we do not benefit from others’ activities. For this reason, it is hardly surprising that most of our happiness arises in the context of our relationships with others.”
Dalai Lama XIV
