There's strength in numbers

Strength in numbers

A panel conversation at the Progressive Hospitality Forum focusing on the merger of Host Management and Catermasters into The HCM Group with Bill Toner, Nigel Johnson and Tony Carr

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In one of the most exciting and considered moves in the foodservice sector in recent times, Host Management and Catermasters have announced the formation of a new business with a turnover in excess of £65 million, 200+ operations and more than 1,500 employees. Named "The HCM Group", the leaders of the business ~ Bill Toner (CEO), Nigel Johnson (Deputy CEO) and Tony Carr (Managing Director of Catermasters) ~ came together to talk about the decisions which led to the merger, obstacles faced in the process, plans for the future of the business and observations on the wider sector.

Beginning the process

It has been 25 years since Richard Moody and Nigel Johnson first established Catermasters, a company which would grow into a national operation with over 100 sites and more than 550 employees. Conversely, Host Management celebrated a decade of operations in 2014 having grown from a standing-start to 120 UK operations and a team of about 1,000. Operating across a multitude of sectors including B+I, leisure, schools & higher education and healthcare, the new business is led by some strong characters with exceptional experience in industry. So how did the merger come about and what are the plans for moving forward?

Bill explained that the benefit for him as someone who has a strong corporate background was working with people he admired and who had developed their business from scratch with a true entrepreneurial spirit. The reality for both businesses as they now grow together is that they will need to keep the best elements of entrepreneurialism but also become more corporate and structured in the way they manage the company, basically adopting the best elements of both worlds. All three were in agreement that the attraction and retention of great team members to the business was a factor in both original businesses and will remain a focal point of HCM Group

 "As a merged company we operate in more sectors which in turn means that we're also able to give our teams more development opportunities than either company could individually. As a result, we now have a larger team with more skills, experience and creativity to draw on and we'll expand faster because we are big enough to take the larger competitors on."

The process of merging these two businesses began as long as 18 months ago and according to Nigel he and Bill spent a while getting to know each other.

"Before you can really get down to business, you have to be certain that you share enough values and the same vision of the future for your merged business. It wasn't all plane sailing and we didn't always agree on our journey to the merger but the interesting thing is that we do share many values but we also both bring unique parts to the relationship."

Building a business in a changing landscape

Throughout the course of the forum, there was a general consensus in the room that the catering sector is constantly changing and especially since 2008, the tendering process has become far more cost driven, often by client procurement departments, and yet this too is changing as clients see the value of the qualitative side of operations.

Mike Day, Managing Director of IndiCater, asked the HCM team whether they thought any of the well-known entrepreneurial investors who had started investing in the industry would bring anything new to the sector. Bill surmised that he doesn't believe they would because their focus was nearly always on financial return and exit, adding that "the difference between an entrepreneurial investor route and the owner-directors route like HCM Group was that they had a different story of passion and vision to sell to clients." For the team at HCM Group, the merger route means they now have the financial security to grow.

In the course of the Q&A session, the question was asked about the attraction of younger workers to the industry. Tony, in his capacity as Managing Director of Catermasters and with the corresponding responsibility for operations, said he thought it was all about getting the opinion of employees as to how to best guide the business in the right direction. By extension, this also gives employees the chance to grow within the company, something both businesses have an excellent track record of doing. Tony himself is a prime example of career progression and promotion from within given that he started with Catermasters as Operations Manager 16 years ago. Bill also commented that he thought it was about giving the team a bigger say in the direction of the company and not just directing from above.

"We actively decided to ask the team what direction they wanted their careers to go in and what they needed to give their best every day. Rather than dictating 'you will do this' or 'you must do that' we have seen real engagement from the team who have whole heartedly bought into the vision of the business"

 

"That's what younger people are looking for and if you want to attract the young talent, you have to give them the chance to be more involved and use the technology that they are used to."

Another observation made in the course of the forum centred on the challenge of competing with High Street brands, which are a significant competitive force.

"Eating habits have changed and Euro-style grazing food is what more people are looking for but when you have so much competition on the doorstep, it's constant hard work to keep people onsite during their lunch breaks."

Sparking off some debate about the importance of brands in contract catering operations, the consensus seemed to be that constant change was the answer rather than having one or two brands on site that never change. Both Bill and Tony were in agreement:

"Contract catering has product lines running into the high hundreds or even thousands – breakfast, lunch, breaks, daily changing menus, and so on. The brands can't compete with this but we do it well. We run regular promotions that give customers regularly changing variety, for example our street food promotions throughout June that raised sales by between 15 and 20% in like-for-like sales from the previous year"

"Success is retaining existing clients not just winning new contracts"

With no shortage of challenges ahead, this business has been created with a strong leadership team at the helm and will undoubtedly face the future on a positive footing. Certainly guests at the forum were left wanting to hear more about the journey thus far, the plans for the tomorrow and expectations on the wider market. Another question raised was also, "Is this the first of many? Will competitors take note and make similar moves and so should the sector brace itself for more of the same?"

The Progressive Hospitality Forum is proudly sponsored by IndiCater, one of the leading providers of web-based back of house management software to the hospitality sector in the UK. Providing a unique range of applications which manage and control costs, thereby driving efficiency, the IndiCater core management control process is a fully comprehensive system specifically designed for the needs of professional operators in the hospitality sector including contract caterers, hotels, pubs, restaurants and event caterers among many others.

For more information on the Progressive Hospitality Forum, and indeed on any other EP initiatives and events, please contact Arlene McCaffrey directly. A synopsis of some upcoming events include

• A series of breakfast conversations with expert observers looking at opportunities abroad for British business and investors. Beginning with an analysis of India on Thursday 25th September, these forums will go on to look at Slovakia, Latvia, Greece and Poland.
• A ½ day conference featuring panel conversations and presentations from some of the most well-known and highly regarded business leaders in the sector looking at how commercial thinking has changed on the morning of Wednesday 1st October

On the morning of Thursday 2nd October we look forward to hosting a breakfast forum looking at the changing landscape of procurement and supplier-relations in the contract catering and foodservice sector