Sodexo – from catering to combined services
From clearing up horse muck to protecting prisoners, Sodexo's reach stretches far beyond catering. Chief executive Aidan Connolly tells James Stagg that while the company is keen to take on all on-site services, the firm's focus remains on food.
How would you describe Sodexo, since you now provide far more than catering services?
We describe it as a provider of comprehensive on-site service solutions. While that's a bit of a mouthful, it really does cover what we do. We provide a range of more than 140 services. Catering is, I suppose, our DNA and we provide cleaning and security but we do some pretty wacky stuff as well.
Increasingly we're being asked by our clients to take on more and more services for them as they try to combat creeping costs.
Do you see yourself as a provider of the complete turnkey solution?
We do provide one perfect turnkey solution for the Government in the prisons service. Here we provide everything: we design, build, finance and operate. Everything within the prison is Sodexo.
We go from complete, large-scale turnkey projects to providing a couple of security guards and a concierge desk in a building. Literally from huge to tiny.
What are some of the more specialist areas you work in?
Well, for example, we mend the organ in Cyprus for the MoD, which clearly we subcontract out - we don't keep organ-menders on the books. We do lots of uniform provision for the military and clean the horse muck at Horse Guards Parade.
So some odd things and the more typical things: we maintain buildings, hospitals and do a lot more where we have people's lives in our hands now, which we never used to. So the business has taken an interesting turn into much more regulated areas.
Is food provision still core to the business?
Food is still half of all our business. Clearly it's where this business came from. Unfortunately more clients are looking to do other things than food, and food is mature as an outsource market so clearly there will be more opportunities elsewhere.
But we focus on food, how could we not?
What do you consider key growth areas for outsourcing?
I think the large multi-service contracts are where we can really impact on our clients' quality of life. That's where we see our USP.
How has business been affected by the recession?
Particularly in the private sector we have seen our clients hit hard. I guess all the big service providers would say the same thing. We service the big industrial base in the UK and clearly that has suffered in the recession and so, to some extent, have we. Although we've been fortunate in that we tend to be part of the solution. Clients turn to us looking to get their cost base down. They want to know what else we can do for them.
Are contracts being priced more keenly?
There's definitely been a margin war as we've faced up to the reality that our clients are having it tough and we can't be seen to be doing well out of it. We are partners.
Certainly our contract scrutiny has increased over the past couple of years. The right quality of business is just as important as having the business. It's not fun recovering money from a receiver.
We have turned down a number of contracts, some high-profile. We run the business for a profit.
Which sectors have held up better?
Clearly the public sector has been relatively less affected. It's well known that employment in the public sector has remained robust. Government spending has been at high levels for a decade so the business we do for them has been relatively secure.
The reality for any Government is that with such a massive deficit they will have to find ways of doing things that don't involve increasing taxes or reducing services. I suspect that, though it may be tough for a little while, the solution will inevitably involve the private sector and we would hope to be involved in that.
When you became chief executive last year you stated that you wanted to reinvigorate Sodexo's catering offer. How is that progressing?
Probably slower than I would want but nevertheless it's quite positive. We have some exciting wins under our belt and some more in the pipeline. We restructured the business to really go after that market and are working on some projects that will underpin our commitment to food as one of the core part of Sodexo in the UK.
We will be investing again in food excellence. I don't think we've been seen to do that for a long time. We'll be able to introduce something in the next couple of months.
Will you be reintroducing Sodexo centres of excellence?
I'm well known for believing in them. I think it was a retrograde step to give them up eight years ago. There will be more service line centres than there used to be. In the past it would only have been food, but now we have the opportunity to execute more skills, though food will be an important one. They will underpin our commitment to the craft.
In terms of facilities management and wider business outside food, is it always allied to a catering offer?
In non-food contracts we've won several multimillion-pound bids recently where we're not providing any food at all. In businesses like our prisons contracts, food is less than 5%. For a long time we've been moving away from food as a core service offer, in that we have to include food in every deal. We don't. But I think it would be a tragedy if this business ever really drifted away from having food excellence at its core.
Are more clients asking for a combined offer of catering and facilities management?
All clients are looking for more value from outsourcing. Whether that drives them along the line of combining services into a comprehensive solution or a best-of-breed approach, they're all looking for value. Price and margin have become far greater factors in contract success over the past 18 months than they were in the past decade.
Increasingly clients understand the benefits of scale purchasing.
Do you have an idea of your perfect spread of business?
Ultimately we would like to take away the back-office issues for our clients and do the lot. That's where our industry will go to and we're all making steps on that road.
What is the biggest challenge for Sodexo as a food provider?
It has to be consistency. The biggest challenge is to take the excellence you see at your best site and make it available across every site because clearly that's what the client is buying.
How much attention do clients pay to sustainability?
An enormous amount. In large public-sector tenders some 40% of the response is about sustainability. Cynically I would say they decide the contract on price, but nevertheless they have enormous interest in sustainability.
For our multinational commercial clients, like ourselves, it's becoming a way of winning business and developing and I think they take it more seriously than the public sector.
They're looking for an ability to articulate a whole approach to sustainability. Clearly food provenance is an issue but carbon neutrality is becoming more important.
What does Sodexo do to further its sustainability as a business?
We have a "better tomorrow" plan and the UK is one of the leading parts of the business in that regard. Many sites are Marine Stewardship Council compliant, we were the first to get widespread Red Tractor accreditation, and we're working on an event at London 2012 where our sustainability credits will be groundbreaking.
We get it to a degree that few other businesses do and we have the scale to make it count. Other businesses mouth sustainability without really meaning it. Not only do we have tough targets but we hit them.
What's the long-term vision for the business?
Inevitably the food market is more mature so as a relative part of the business food will decline. I absolutely expect to grow the food business but I expect to grow the other bits quicker.
FACE TO FACE WITH AIDAN CONNOLLY
Aidan Connolly will be interviewed by ITV's Mary Nightingale at this year's Arena Face to Face, being held on Friday 30 April at the Dorchester hotel, London.
In what is expected to be a candid and thought-provoking interview, Connolly will answer questions about his career progression, personal drivers and ambitions. He will also provide an insight into what the future may hold for both Sodexo and the wider industry.
The networking lunch will be prepared by the Dorchester's executive chef, Henri Brosi, and his team.
Go towww.arena.org.ukto book tickets
