Sainsbury’s, Waitrose and Restaurant Group warned on competition

Managing director Jamie Hopwood welcomes growth but warns on skills shortages and rising costs

The world’s biggest caterer Compass posted a 14% rise in annual pre-tax profits and forecast revenues to rise between 4 and 5% over the next financial year, but said it was facing increased competition from smaller rivals and repeated its call for government and parliament to address the need for apprenticeships to meet “nearly non-existent” training standards.

“The market is not irrational or in disarray or waiting for some miracle, but the opportunity is not there for people who are not already in the system to look at it,” said Jamie Hopwood, managing director of Compass, which has posted higher sales and profits across its operations over the past 12 months.

The company, which has expertise in catering in various sectors, added: “There is no point in the public and private sector preaching about apprenticeships and taking a leaf out of the book of 21st century companies like Apple or Google, when it’s all about their business.”

Hopwood, who joined the company in 2013 from Guardian Media Group, said Compass was eyeing opportunities to expand its concessions offering in the UK. “We should be the locus of the decision-making that will decide on what we call food service for the future of the UK.”

The caterer, which was founded as a kitchen for the British Army in 1952, has owned outlets in McDonald’s outlets since 2002, including locations in the UK, Ireland, the Netherlands and the USA. It operates in more than 100 countries and offers its services to approximately 500,000 people a day in 166 countries.

However, it still serves a very slim slice of Britain’s population – the group is estimated to account for no more than 0.4% of gross domestic product. A spokesman said: “The NHS has to make more from services, and that is what we offer – a cost effective way to provide food for people who currently don’t get it.”

Hopwood said: “Government and parliament have to find the solution to deal with non-existent training standards. We don’t think the apprenticeship system is fit for purpose. The GP system is pretty much the same.”

The caterer, which makes its money from large-scale food and beverage contracts, has been hit by Britain’s decision to leave the European Union and warned it would face delays in obtaining licences for products exported to the EU.

It is the first time in over two years that the caterer has given a capital investment update and said total spend for the year to end September 2017 was expected to be around £525m, slightly higher than a previous guidance of £475m.

However, as well as taking on new projects, the caterer said it was building up its free cash flow – essentially profits after paying interest costs – but warned this was down to rising capital expenditure.

“A number of factors mean that our pay-off, our return on capital [over the next three years], will increase marginally,” said Hopwood. “This is a consequence of a tougher environment in which we’re operating, and in which the opportunity is less clear to investors.”

He confirmed that Compass had not been approached for a merger in recent months but said an approach could come at some point in the future.

“The idea of a merger has been looked at,” he said. “But it has not been ever going to happen. The market clearly feels that we have done that well, we’ve shown growth and therefore another company has to show that it can do it better.”

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