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Caterers cook up cloud kitchen strategy for post-pandemic offices

Food has emerged as a new front in the struggle to recruit reluctant workers back into the office and as companies adapt to hybrid work, so do the catering groups that serve them.

Lunch menus at tech companies’ offices such as Netflix and Palantir in London now feature charms marinated in hake, orange and saffron roasted carrots, and chocolate and sea salt triangular brownie desserts, provided free of charge to employees.

Food is no longer a “commodity” but a way to entice staff to the office, said Christina Cobello, head of strategic growth at Fooditude, the company that produces the 3,000-square-foot kitchen in an industrial mansion in south Bermondsey, London.

Fooditude is part of French Sodexo, which acquired a majority stake in the group in 2020 to build its capacity in so-called cloud kitchens: off-site catering facilities used to prepare meals for delivery.

Traditional caterers like Sodexo hope this flexible approach will allow them to recover from the epidemic. It could also help ward off startups for deliveries like Just Eat that are moving to a $ 70 billion workplace catering market that has yet to recover from the impact of work from home.

Office occupancy levels in the UK stood at just 25% of capacity last week, according to asset analysts Remit Consulting.

The world’s four largest caterers, Compass, Sodexo, Elior and Aramark, make up about 30% of the global $ 220 billion catering market, according to Compass. They provide services to hospitals, schools and events, but 30 to 45 percent of their revenue comes from business and industry, a category that includes offices.

Dominic Blackmore, CEO of Compass, said more than half of the UK-registered catering group’s business had “completely stopped” following the Covid-19 eruption. Operating profit fell 70 percent in 2020.

The company has since recovered but its business and industry revenues remained 23% below 2019 levels.

The drop in demand for office catering came with the emergence of new threats. The top four suppliers account for one-fifth of total revenue from the business and industry sectors, according to analyst Bernstein Richard Clark. But food delivery startups are trying to enter the market.

Just Eat Takeaway, best known for its takeaway delivery service, paid £ 16 million in 2019 to acquire City Pantry, a London-based startup that said it was “changing the way people make food at work”. Eat for Business, it says it delivers meals at home and in the office to 30,000 employees in 600 companies every week.Rival competitor Deliveroo has launched a similar service, Deliveroo for Work.

While people like Sodexo prepare their own food, Just Eat and Deliveroo provide restaurant meals to business customers by expanding the core service to their consumers, although their market share remains small and they are city-focused.

For employees, a selection of local restaurants offer a more attractive range of lunch options, said Matt Afgrave, CEO of Just Eat for Business.

Despite the advent of Just Eat and Deliveroo, some businesses have remained “quite apprehensive” about investing in upgrading their services using technology like completely cash-free services, Clark said.

But faces a long-term transition to Flexible workSome caterers reinvent themselves.

Elior, whose UK customers include Coca-Cola and retailer Hammerson, is using its cloud kitchen network to take advantage of a new revenue stream: small and medium-sized businesses.

On-site kitchens are required to serve at least 150 coverages to be cost-effective, but cloud kitchens allow catering to serve businesses with 10 or 15 employees, which significantly increases the marketable market.

Catering develops expertise in other areas as well. Elior acquired the food delivery startup Nestor, while Sodexo expanded its courier service with the catering contractor The Good Eating Company.

With fewer on-site kitchens, catering companies can also save by operating with fewer staff. Julie Anis, CEO of Sodexo Enterprise Services for the UK and Ireland, said: “We are also collaborating with existing clients to use the space already there to service sites within a 20-minute radius.”

Blackmore and other caterers claim they can develop more economical delivery models than Just Eat.

Compass acquired startup Feedr’s London cloud store for about $ 24 million in 2020. “We have the efficiency of scale and delivery. We do not deliver two meals, we deliver 50 to 100,” Blackmore said, adding that many clients do not want multiple delivery drivers to come to their office during the day.

Reducing labor costs would be a particular benefit to the UK hospitality business, where the Brexit and epidemic have hurt manpower levels.

Ennis said: “We have to adapt anyway because we can not get the staff. We have to change the model to do that.”

Catering invests in automation that can help deal with this problem. Last year, Compass acquired Indian startup SmartQ, which it says will provide technology for cafeterias without cashiers.

The cost savings from operating cloud kitchens also offer the caterer an opportunity to fight rising inflation, especially the pressure to raise wages.

“Inflation is driving these changes,” said Daria Pomina, an analyst at Goldman Sachs. “With manpower shortages and rising labor costs, you need to be more creative.”

Caterers cook up cloud kitchen strategy for post-pandemic offices Source link Caterers cook up cloud kitchen strategy for post-pandemic offices

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