Activities

Sodexho UK & Ireland, a subsidiary of the Sodexho Alliance of France, is a leading player in the contract catering and facilities management sectors. It grew into the UK’s largest contract caterer until the merger of the foodservice divisions of its two nearest rivals – Granada and Compass – in 2000.

Sodexho Alliance operates in 78 countries. The UK and Ireland is its third largest market after Continental Europe and North America and accounts for 14% of group business. Business and industry accounts for more than two-thirds of business in the UK and Ireland.

The UK arm claims three out of every four FTSE 100 companies as clients. It operates under a number of key divisions:

Sodexho Business and Industry,
Directors Table (fine dining subsidiary of B&I division)
Sodexho Education,
Sodexho Healthcare
Sodexho Prestige (events and leisure catering),
Sodexho Defence Services,
Universal Sodexho (remote sites)
Tillery Valley Foods (a supplier of chilled meals to NHS Hospitals)
Sodexho Facilities Management
Sodexho Land Technology (grounds maintenance)
Sodexho Safeguard (health and safety consultant)
Sodexho Healthworks (management services for health, fitness and leisure facilities in the workplace)

Timeline

• 1886: John Gardner sets up a butcher’s shop in Leadenhall Market, London.
• 1920s-1950s: John Gardner now runs a retail and wholesale supply business with a chain of restaurants. Peter Merchant, who set up in the twenties, is operating a tea and buns business for building sites by 1946. Key contracts won by the companies in the following years include Ford Motor Company (1930) and the Olympic Games (1948) for John Gardner and Earls Court Exhibition Centre (1957) for Peter Merchant. 
• 1961: Trust Houses Ltd (which becomes Forte in 1970) buys Peter Merchant.
• 1966: Sodexho Alliance is founded in Marseille by chairman and chief executive Pierre Belloc. It floats on the Euronext Paris Bourse in 1983.
• 1968: Trust Houses buys John Gardner and merges it with Peter Merchant to create Gardner Merchant, the UK’s biggest industrial caterer. The group expands through new contracts and acquisitions across the world.
• January 1993: Gardner Merchant negotiates a management buy-out from Forte in a deal that allows 1,000 of its senior managers to invest in the new company. Its rapid growth is underlined by a 50% boost in 1993 pre-tax profits to £46.9m on a £1b turnover.
• 1994: Gardner Merchant moves into China, Russia and Kazakhstan. By now, it has more than 6,200 outlets in 20 countries. The group shelves plans for a stock market flotation and news emerges of discussions for a £600m-plus takeover by Granada.
• February 1995: Gardner Merchant agrees an alliance with Sodexho to create the world’s largest contract caterer. Gardner Merchant retains its trading name and continues as a separate structure under holding company Sodexho.
• 1996: Gardner Merchant buys Gwent-based Tillery Valley Foods, a supplier of chilled foods to health service caterers, for between £8m and £10m. It also strikes up a partnership with celebrity chef Gary Rhodes which leads to the opening of two public fine dining restaurants in London – City Rhodes and Rhodes in the Square– which go on to win Michelin stars. From 1999, a planned chain of brasseries called Rhodes & Co opens in hotels and department stores in cities such as Manchester and Liverpool.
• October 1997: Gardner Merchant boosts its turnover to £1b with the £30m acquisition of Marriott Management Services. Marriott entered the UK in 1995 after buying Taylorplan in 1995 and Russell & Brand in 1996. It’s part of a larger deal in which Marriott’s US food service and facilities business merges with Sodexho Alliance’s North American division to form the £2.5b-turnover Sodexho Marriott Services. Gardner Merchant also snaps up UK events caterer Lawson Beaumont for £2.5m from the Break for the Border Group.February 2000: Gardner Merchant changes its name to Sodexho.
• April 2002: Sodexho Alliance drafts in Mark Shipman as chief executive to head up a recovery plan for the UK and Ireland. 
• November 2002: Group operating profits slump by 10% (or £19m) thanks to a poor performance in the UK where “accounting anomalies” and “serious errors of management” have been uncovered.
• January 2003: Sodexho terminates its partnership with Rhodes and closes the remaining restaurants in London.
• March 2003: Sodexho Prestige buys the rights to use the Wheeler’s of St James’s seafood brand from Marco Pierre White.
• May 2003: Anton Edelmann, maître chef des cuisines at London’s Savoy hotel for 21 years, announces his departure to become principal chef at Sodexho’s fining dining subsidiary Directors Table.
• January 2004: Francois-Xavier Bellon becomes chief executive, but steps down in May due to ill health. Philip Jansen takes up the reins in June.
•  September 2004: Sodexho Alliance warns that it will take another three years to restore margins in the UK.

Financial snapshot

Full year

Group turnover: €11.7b (2004: €11.5b)
Group net income: €159m (2004: €183m)

Half year

Group turnover: €6.5b (2005: €5.9b) 
Group net income: €160m (2005: €94m)

Financial year end: 31 August 2005
Half year end: February 28, 2006

Operating data

Number of employees worldwide: 324,000 at 26,700 client sites in 76 countries
Number of UK and Ireland employees: about 48,000 staff across nearly 2,300 client sites.

Results for food and management services in the year to 31 August 2005

Divisional turnover: €6.4b (2005: €5.8b)

In the UK and Ireland, turnover was €663m (2005: €640m) and operating profit was €17m. 

In North America, turnover was €2.9b (2005: €2.6b) and operating profit grew by 7.8% to €152m. 
In Continental Europe, turnover was €2.1b (2005: €1.9b) and operating profit  grew by 1.5% to €103m.
In the rest of the world, turnover was €678m (2005: €558m) and operating profit was €11m.

Turnover by business:

Food and management services: 98% (business and industry 41%, education 24%, healthcare 19%, old people's homes 5%, remote sites 5%, defence 3%, and prisons 1%)
Service vouchers and cards: 2%

Strategy

The group aims to increase operating profit by around 6% in fiscal 2006 (excluding the impact of currency conversions) and to boost organic sales growth by around 5%.

Its stated Ambition 2015 - developed by 350 managers from around the world - is "to be the premier global outsourcing expert in quality of life services."

Source: interim results statement, 11 May 2006

Chief executive

Philip Jansen (UK and Ireland)

Key directors

Executive chairman, UK and Ireland: Michel Landel
Chief financial officer, UK and Ireland: Debbie White
UK global and development director: Richard Jackson
Director of performance improvement: Vincent Ribet
Marketing director: Jenny Wilson
Retail director: Maureen Bannerman
Corporate affairs director: Phil Hooper
Managing director, healthcare: Iain Anderson
Managing director, education: Jim Brewster
Managing director, business and industry and Prestige: Mike Johnson
Managing director, business and industry, regional and Ireland: Paul Daly
Commercial director, business and industry: Judith Davidson
Executive director, defence, land technology, facilities management: Andrew Leach
Managing director, Tillery Valley Foods: Michelle Hanson

Contact

Solar House, Stevenage Leisure Park
Kings Way
Stevenage
SG1 2UA

Tel: 01438 341 400
Fax: 01438 341 541

E-mail:
Website: http://www.sodexho.co.uk

Commentary

Jansen’s role is to revive the ailing UK arm of Sodexho following his success in turning around both MyTravel and Telewest.

The key problems identified at Sodexho UK and Ireland in 2002 included forward sales for its ground maintenance arm (which made a loss of €32m) allied with the poor retention of business and industry contracts, many of which were unprofitable.
 
The situation was not helped by a high turnover of site managers, three different chief executives over 15 months, a TV exposé of unhygienic practices at Tillery Valley Foods in 2004, and Jamie Oliver’s high profile campaign over the poor quality of school meals. To add to its woes, Wiltshire County Council launched a review into whether Sodexho’s school meals contract was providing value for money.

The group addressed its problems by axing unprofitable contracts, exiting hotel management and standalone restaurants, offering more services per site, investing in training and management development, and dealing directly with food suppliers.

Although the UK arm unexpectedly boosted its operating profits by 25% to €28m in the year to 2004, profits dipped again in the three months to the end of November.

Sodexho, in common with its peers, faces a sea change in the UK market as more clued-up clients demand greater value for money and fixed-price contracts replace the old open-ended cost-plus deals. The vogue for freshly-made (but low margin) food has accompanied question marks over the nutritional value of the bulk-bought convenience foods that gave the giant players their edge in the past.