Compass Group profits slump as Covid keeps office canteens closed
Revenues down by a third and analysts say demand for food service in office buildings unlikely to fully recover
Last modified on Wed 12 May 2021 06.18 EDT
Sales and profits have slumped at the catering firm Compass Group as the pandemic kept canteens closed at factories, offices and schools.
Operating profit fell to £290m in the six months to the end of March, down 65% from £817m a year earlier, while revenue was down almost a third to £8.6bn.
However, the figures were an improvement on the previous six-month period, when Compass had to shut about half of its operations during the first Covid-19 lockdowns in spring 2020.
Compass said it had continued to retain almost all (96%) of its customers during the winter and this spring, and had won new business as more firms turned to outsourcing. The proportion of new customers that were outsourcing for the first time jumped to about 50%, up from around a third previously.
The chief executive, Dominic Blakemore, said: “With the gathering pace of vaccination rollouts across our major markets, we are working closely with our clients to prepare to reopen their sites safely, although the picture across the world remains mixed.”
Analysts said office workers’ desire to continue working from home for at least some of the week following the pandemic would lead to reduced demand from for food service at office buildings.
“Compass Group has an over-reliance on corporate demand for food services, which has been decimated by a newfound appetite for homeworking in the UK and the US,” said Harry Barnick, a senior analyst at research firm Third Bridge.
He said demand for food service in schools and healthcare facilities would recover faster, but corporate food service was expected to be “structurally smaller post-Covid whilst businesses reorganise themselves around employee demand for home and hybrid working”.
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