Everything starts with T
Senior directors from one or other of the big contract caterers are forever flying the nest to form their own fledgling companies. The formula is a bit textbook by now: the escapees have learnt well the craft of managing budgets, managing suppliers, and the difficult part of the job - meeting client-customer expectations in a workplace restaurant.
It is not difficult for new contract catering companies to pick up business on the margins. There is no shortage of low-volume contracts for 100 employees or fewer - contracts that are barely viable as far as the big players are concerned. Yet gaining half-a-dozen of these modest contracts in a business where capital start-up cost is relatively light can get a new contract catering company up and running.
What makes Lexington Catering different is that this new, escapee-driven company landed itself with a whale of a deal right from the off. Its first - and until recently its only - staff-feeding contract was for 5,600 staff at the six UK sites of T-Mobile, the telecommunications giant formerly known as One2One. The contract is worth £5m a year in turnover.
Lexington's two main owners were formerly senior managers with Avenance. Mike Sunley was managing director of London City and West End contracts and Clare Prowse was sales and marketing director for London. In 2001 they had both begun to think privately that the time could be right to break out on their own. Says Sunley: "I'd enjoyed my time with Avenance, but I'd been there for 13 years. With the changes that were coming in with the expansion of Avenance I felt I was losing hands-on contact with clients, and I missed it. And the thought of starting and running your own company is always exciting."
The dilemma for every senior executive in this situation is how to whisper to a colleague that treason is afoot and not risk the nightmare of the shocked colleague running to the boss. Sunley and Prowse say it began with light banter of the "what if" and "have you ever thought" type. Sunley explains: "When you have worked closely with someone for a long time, you get to know their body language, you can read the subtexts. Then you have to take a leap of faith and just come out with it. The hard part is then telling colleagues you've worked with for many years what you are doing. You get a feeling of disloyalty to them, but most just said ‘Go for it'."
Two other Avenance colleagues did more than just wish them well and joined Sunley and Prowse in setting up Lexington Catering. Rachel Lindner and Katharine Campbell came on board as the two other directors.
Lexington Catering was formed in January last year with £100,000 raised privately by Sunley and Prowse. The intention was to target the type of contract business they both understood well: top-end dining in the City of London.
"But last year wasn't a good time for the City, and there was a reluctance to start changing contract caterers. There were far more important things to worry about, and the problem for a new contract catering company is that everyone wishes you well but doesn't want to be the guinea pig," says Sunley.
T-Mobile was an existing Avenance contract, split over several sites, but with its corporate headquarters in Borehamwood, Hertfordshire. Last year the Borehamwood campus was in the process of being run down and transferred to a new site in Hatfield. As part of the courtesy goodbyes, Sunley informed the client contact at T-Mobile what he and Prowse were proposing to do.
Their proposition was to offer something bright, fresh and different in staff feeding: restaurants that had a young, dress-down look to them with the type of food more commonly seen in a bistro than a works canteen - plated service rather than ladling food out of gastronorms. Menus and recipes would be left to the chef at a local level and there would be a policy of "fresh is best" and "buy local". Lexington had also done a licensing deal to have a caf‚ selling Starbucks products.
From the outset, they intended to be a staff-friendly business, with an external training company to teach interpersonal skills between staff and customers. They believe in rewarding staff, using loyalty schemes, giving a day off for a birthday, and lots of empowerment at every level. While it might logically be the ambition of such a meteoric new business to aspire to the Sunday Times list of 100 fastest-growing companies, Sunley says their aspiration is to make the Sunday Times list of the 100 best employers.
Several weeks after saying goodbye to T-Mobile, Sunley received a call inviting Prowse and himself to talk in more detail about their business plans to see if they fitted the young staff and dress-down culture of the new T-Mobile site under development in Hatfield.
T-Mobile took the view that since Hatfield was a new site, it was reasonable to take a new look at who was going to do the catering for the first phase, which opened in June 2002 for 500 employees.
Second restaurant
Lexington, still without its first contract, was invited to bid for the catering. The other invited bidder was, of course, Avenance. Lexington won the contract, and with the Borehamwood site closing as each new development phase of Hatfield opened, it was obvious that if Lexington got its first piece of business for T-Mobile right, more should follow at the Hatfield site. And it did. Three more phases at Hatfield last autumn meant building a second on-site restaurant and a second Starbucks as the number of T-Mobile staff on site swelled to 2,000.
Last December was crunch time, when T-Mobile realised it had the feeding contract across its six UK sites split between two caterers, which didn't make sense, so it called a review to see which was going to go: Lexington or Avenance. The Avenance contract was terminated, and Lexington took over the whole catering business to feed 6,500 employees, last March.
This was clearly a flying start for any new contract caterer. But with just one client, Sunley and Prowse were wary of complacency - not least because the majority of T-Mobile's employees work in call centres and there is a trend to move call centres out of the UK to India.
That, says Sunley, is something they are very mindful of, and Prowse has been going after more business. In the past few months Lexington has won three smaller contracts with a combined annual turnover of £900,000. They are with Italian bank Intessa, investment bank Singer & Friedlander, both in London, and plumbing products company Wolseley in Theale, Berkshire.
The City of London is still a prime target for business, as in the original plan, since both Prowse and Sunley have many client contacts there. Prowse admits that having a high-profile client such as T-Mobile offers a huge endorsement when bidding for other contracts. Neither is she searching only in the City of London. Part of her strategy is to win contracts near the T-Mobile sites they currently have, which cover Scotland, Wales, South Yorkshire and the Thames Valley.
The details
Lexington Catering
210 Mile End Road, London E1 4LJ
Tel: 020 7791 1100
Web:www.lexingtoncatering.com
Formed: January 2002
Start-up cost: £100,000
Number of contracts: three
Staff: 250
Projected turnover for 2003: £5.9m
Terms of business: cost plus 6% of turnover
Retained supplier discounts: "definitely not"
Samples from the T-Mobile menus
- Courgette and grain mustard soup, 50p
- Grilled tuna steak with lemon chutney, £2.25
- Gnocchi with green pesto and pine nuts, £1.80
- Salmon in a mustard crust, £2.25
- Thai red hot curry with coconut-infused brown rice, £2.15
- Apple and almond strudel, 60p
- Starbucks grande latte or cappuccino, £1
