Stamp of approval?
On 26 March 2001, the Post Office, one of the oldest institutions in the country, officially changed its name to Consignia. To underline its determination to prove itself as a major player in the global distribution market, the organisation has invested £500m in overseas acquisitions and now owns 20 international companies involved in a diverse range of services from e-commerce to logistics and warehousing. As chairman Neville Bain says: "The new name will reflect the widening scope of our services as people change the way they run their businesses and lives."
Closer to home, Consignia has made significant changes to its own business structure. While the Post Office brand name has been retained, it became a government-owned Plc in March, allowing greater control over commercial decisions and more freedom to borrow and invest in services.
But so far, many of Consignia's more traditional branches have yet to feel the full force of the change - apart from the catering arm, which made its first move into the commercial market three years ago in 1998.
The Post Office's catering operation has fed and watered employees at the hundreds of UK sorting offices, large and small, for more than 40 years. In 1988, the organisation made it a separate business, giving it the name of Quadrant Catering. This gave it more autonomy to operate, although it remained confined to the public sector by the DTI. Ten years later, with increasing pressure to become a more commercial organisation, the Post Office sold 49% of Quadrant shares as part of a joint venture partnership with Granada Food Services (now Compass Group).
"Consignia wanted the joint venture so that Quadrant could sell its services in the private as well as the public sector," says David Bate (left), managing director of Quadrant who came to the company from Sutcliffe (Granada) in 1998. "It was a case of having to, in the light of the competition that Consignia had been faced with over the years."
As the first joint venture partnership of this kind that Consignia had been involved with, the deal with Quadrant is something of a testing ground for the organisation. Referred to by some in the industry as "a sleeping giant", Quadrant has received substantial investment from the Post Office over the years, developing a specific area of expertise, namely in residential and training centres, as well as in the 750 locations around the country. To prove itself in the commercial market, however, Quadrant needed a partner like Compass.
"I was delighted with the state of Quadrant when I found it," says Bate. "There was a lot to build on, although the policies and procedures used in the company then were very much driven by the Post Office, not by catering. One of the agreements of the joint venture was that the day-to-day management control should be given to Compass because we are the experts in that industry."
With Compass on board, Quadrant has succeeded in increasing turnover from £80m to £95m over the three years and increased the net profit from £2.7m pre-joint venture to £9.8m last year. The number of contracts secured has risen from 23 in 1998 to 108 this year, with profit margins up 49% over the past year. It is now the fourth-largest contractor in the industry.
An annual investment of £1.75m has been spent on new systems for Quadrant since the joint venture. Many have been adopted from Compass - including its payroll system, IT systems, new tills and loyalty schemes to attract initial sales through the restaurants and bars.
Getting the name into the public domain, however, was the first task. Mailshots, competing for awards and accreditation were first steps. Awarded Investors in People seven years earlier, Quadrant achieved Hospitality Assured accreditation within a year of the joint venture, the first contract caterer to achieve it throughout its whole business.
"It was all about getting the Quadrant name into the market and looking at what sort of presentation we had in the industry," Bate says. "Getting Hospitality Assured accreditation was the way forward for us."
Current contracts include Hampshire and Cambridgeshire Police Forces, Kwik Fit, Peugeot, Toys R Us, Siemens and Royal Mint among others. But Quadrant's main contract remains Consignia. Of its 470 restaurants, 390 are Consignia's, as are 750 of the company's 1,850 vending-only locations. With £83m of the £95m turnover this year from that same contract, it is, for Bate, a perfect opportunity to gain further business: "One of the beauties of contract catering for Consignia is that it takes us into every town and city in the country. If the Post Office has a sorting office we have a service. We can then sell on a local basis around the whole of the UK and target clients who we wish to do business with, in B&I and residential training colleges."
Residential training centre Coton House, in Rugby, run by Consignia's Training and Development Group, receives more than 24,000 visitors a year and is one of two sites originally set up for Consignia staff - although the Open University and others now made use of the facilities. General Manager Alan Saxon (right) is proud of the changes that have been implemented since he started as food services manager 18 months ago. Working with a cost-plus contract, Quadrant receives a bonus if specified targets are met. Sales are up and customer satisfaction is high, according to recent customer surveys. Wastage has been reduced by better control as well as forward planning for a cost-effective workforce.
"The training centre needed more flexibility," he says. "While this is not a hotel, we were aware that people's eating habits had changed and so they wanted more choice. We realised that to offer a successful training course we had to approach the experience in a holistic way, so what we do affects the whole experience of the visit and adds to the content of the course."
According to Saxon, the opening of the 154-seat Whittles deli bar (left) has transformed the facilities at Coton, offering an alternative to the more formal 160-seat silver service restaurant. Serving between 300 and 400 covers from 12pm to 1.30pm, the bar offers snacks and hot dishes for breakfast, lunch and dinner as well as a licensed bar in the evenings, quiz and music nights, regular film showings and themed food events. A hub of activity during the evenings, it has proved a success in keeping residents occupied in the evenings and, importantly, on site.
"Since the joint venture we have not only transformed the area, but helped in reducing overall costs," says Saxon. "Before, residents were given three-course meals for lunch and dinner that they couldn't eat. And a full-blown silver service dinner is labour intensive. We've reduced wastage, we avoid menu fatigue with salads, low-fat dishes on a five week cycle, and made a healthy gross profit through the bar."
The success of Quadrant in its joint venture partnership is just part of a course of events that will happen to other Consignia services over the coming year. As Bate explains: "Consignia is divesting itself of some of its support services to concentrate on its core qualities. Quadrant was already professional in its area of expertise. It only needed a partner to help exploit it in the private market. Now we are a force in the industry and it's a treat to tell a client your pedigree."
The Whittles bar serves up to 400 covers at lunchtime, and makes a healthy profit on drinks
FACTS
Quadrant Catering
Block 2, Dorcan House, Eldene Drive, Swindon SN3 3UYTel: 01793 546500
Managing director: David Bate
Commercial director: Roger Whitehead
Financial director: Steve Buesden
Number of contracts: 108
Turnover 2000: £90m
Projected turnover: £95m
Net profit in 1997: £2.7m
Net profit in 2000: £9.8m
Employees: 2,600
Quadrant is owned by Consignia and Compass, who own 51% and 49% shares respectively
Quadrant's Board is made up of the following members:
David Bate, Quadrant Catering
Peter Aldrich, Compass Group
Jo Archer, Compass Group
Gerry Smith, Consignia
Charles Bartholomew, Consignia
Source: Caterer & Hotelkeeper magazine, 10-16 May 2001
