Compass uncertainty puts contracts at risk

Compass Group may lose business as a result of the company's recent setbacks, according to industry sources.

After three profit warnings in a year, a UN investigation into a food and water deal in Liberia, takeover rumours and changes at senior management level, some say customers have started to review their relationship with the caterer.

"People are running about asking 'What's going on?'" said the catering manager at a major London bank catered for by Compass. "The problems will impinge on the decision-making process when the contract comes up for tender. When deciding between Compass and other caterers, it will undoubtedly be an added risk."

Another industry source said some businesses were reviewing their relationship with the contract caterer. "Restaurant Associates [Compass's fine-dining division] was called in by a bank recently because it wanted to remove it from the bidding process," said the source. "Although it wasn't removed, I know some customers who are getting wobbly and thinking the same."

But Tony Horton, managing director of food service consultancy Tricon, believes concern is not universal. "Clients who are fairly organised are not panicking, but those who may not have a grip on the finer details of their contracts will be worrying more."

A Compass spokesman said: "We are talking to all our key clients to reassure them that we are focused on meeting their requirements, and explaining that we have a very clear plan for the business."

According to one source, news that a tranche of senior managers will be made redundant will further hit the company's chances of winning and retaining deals.

"This is a people-led industry, and stripping out a load of managers is very bad for business, because customers will inevitably feel that they are losing support," he said.

The redundancies seem to be affecting morale within the company. One Compass manager said: "People are concerned and nervous about the future. The stuff happening at the top isn't helping at all."

A Compass spokesman denied that this was a problem. "None of the changes in the UK will affect unit level. There is really good morale at unit level."

By Tom Bill

Get your copy of Caterer and Hotelkeeper every week - click here to subscribe and save 25%.