Hybrid working poses ‘long term challenge’, says Compass Group CEO

Compass Group chief executive Dominic Blakemore today admitted that the scale of hybrid working is a "long term challenge", as the world’s biggest catering company reported a nearly 80% slump in profits.

Compass, which supplies meals in schools, offices and stadiums, has laid off around 7000 UK workers and completed a £2 billion cash raise since the pandemic broke out.

On Wednesday it said operating profits were down 78.3% to £168 million for the six months to April, with volumes down 72% on 2019 revenues in the second quarter. Revenue dropped 32.4% to £8.4 billion, but the firm anticipates a gradual improvement in revenue in the third quarter. The company also said it is to repay furlough money received in the half.

Blakemore told the Standard he is confident the group will adapt to a new working future, saying it is changing its business model to offer corporate clients the more personalised service they now want, while improving its digital offering with increased focus on deliveries and wellness.

He said Compass has already seen the number of accounts it is winning increase by 20% over a pre-pandemic benchmark, and a strong increase in its first time outsourcing rate.

"We're adapting our operating model. Coming out of this we see consumers wanting a more personalised experience, clients particularly in the corporate sector wanting what we describe as more purposeful offering," Blakemore said. "The only long term challenge for us will be the scale of hybrid working. And we are quite excited about that because we think we have a great offer, we can win more business, and over time will replace any lost volume with new accounts.

"We are confident that we can get back both the profitability and the scale, it is just going to be a staged journey."

Compass also faced furore earlier this year when its subsidiary Chartwells saw the meagre contents of free school meal boxes it provided to British schoolchildren exposed by parents and labelled “unacceptable” by campaigning footballer Marcus Rashford.

Blakemore said the firm had apologised over the issue, and is working with the Government and the Marcus Rashford Foundation on "what the school meal offer needs to look like going forward". He said the group has retained all existing business in the sector, and has since gone on to win new clients.

Steve Clayton, manager of the Hargreaves Lansdown select funds, said that the news new business is picking up "suggests that the future growth opportunity is getting stronger" for Compass.