Private Function
Management buy-outs and private equity groups financing deals to take public companies back into private hands have been a feature of the business scene in the last few years.
Indeed, in the contract catering sector alone two of the 'Big Four' in the UK, Aramark and Elior, are currently subject to buy-out offers. Chairman Robert Zolade has just acquired more than 90% of Elior's shares through his bid vehicle Holding Bercy Investissement and will take it into private hands.
And Aramark Corporation in the US, parent to the UK operation has appointed a committee of independent directors that is looking into a £3.07billion buy-out offer from Chairman and Chief Executive Joseph Neubauer.
With all this private-equity-backed activity to take companies private there must be good business reasons for eliminating the need to satisfy the sometimes short-term demands of shareholders.
At BaxterStorey they certainly believe that's the case. The fifth largest contractor in the UK is independent, privately-owned and doing very well indeed. It operates exclusively in the B&I sector and claims a 3% share of the contracted out market. This translates into 280 clients over more than 300 sites generating about £130 million in turnover.
The merger in 2004 of Wilson Storey Halliday with BaxterSmith provided a certain amount of instant business clout, but since then the company's growth has been strictly organic, acquiring new clients and, importantly, retaining existing ones.
So, has the team achieved the contract catering equivalent of alchemy, growing the business without losing the personal touch that smaller operators bring? Chief executive Alastiar Storey says: 'Most companies will market test the catering every three to five years and there are people coming along and telling them 'we're the new kid on the block, try us'.
"But with the team we've put into place, we've got lots of creativity and energy and we offer a very personal style because clients know they are dealing with a board member who does not have lots of layers of bureaucracy to go through to get a decision."
£750,000 IT INVESTMENT
Not only do Storey and deputy chief executive William Baxter feel they have built a very strong management team, but they believe that investment in back-up such as IT, Software and purchasing has freed this team to play to its strengths. For instance, BaxterStorey has allocated £750,000 to be spent over the next two years to keep its IT systems 'ahead of the game'.
Says Baxter: "By the very nature of this business you are very busy and the amount of time you can spend with clients is very important. We have set up specialist divisions run by real experts who focus on IT, Payroll, Personnel, and Finance so that we can concentrate on food and sales. "By setting up in this way we probably have more time than ever with our clients."
In addition to a flat management structure and a commitment to restrict the number of clients per area manager, the other features of the BaxterStorey formula are a policy of maximum fresh food, ethical produce and major investment in staff training and development.
Storey says: "There has been a huge ground swell of interest in ethical produce from consumers and we decided three years ago to develop our own brand. We now serve Down to Earth branded coffee at three quarters of our sites. Clients, of course, choose whether they want it on offer to their staff, but they find it outsells our regular coffee."
Baxter adds that the firm's concern to provide Third World producers with a fair price has developed into a more general sense of responsibility about the environment, cutting waste and recycling that has formed the backbone of BaxterStorey's Corporate Social Responsibility (CSR) policy.
"We operate in an industry where all these issues are very important and we do have an opportunity to improve people's lives. We genuinely believe in it, we're not just paying lip service.
"But it's also become a serious business proposition and CSR policies are becoming part of the selection process for new contracts. It has swung things in our favour at our DeFRA sites, for example, where we have removed all the plastic."
HR and training director Linda Halliday, who is known in the industry for her work in staff training and development, has teamed up with company executive development chef Rik Razza to launch BaxterStorey's new Chefs' Academy, which officially starts in September.
LARGEST FOOD MARKET
This will offer more than 40 chefs of differing abilities each year the chance to train for formal qualifications ranging from NVQ Level 2 and 3 all the way up to university-level Bachelor of Science in International Culinary Arts.
Along with the formal learning, chefs will get work experience at the Vineyard, Stockcross with John Campbell, spend two-day working sessions with key BaxterStorey suppliers and take a field trip to Rungis in Paris, the largest food market in Europe.
In this way the management believes it has put into places the pieces need to take BaxterStorey forward.
"We're not a greedy company. We want to be fair to our employees, pay our employees, pay our suppliers on time and continue to grow organically at a rate we can manage," says Baxter. "But that doesn't mean we're not ambitious. We have already identified the senior people we want to recruit and we'll make sure they're on board before they're needed".
And he says he's putting the champagne on ice to celebrate when BaxterStorey achieves £200m in turnover. "That's not beyond the bounds of the imagination over the next few years," adds Storey.
-x- David Foad reports from Cost Sector Catering (July 06) -x-