From office chef to global sandwich maker

MIKE Bailey is passionate about food and statistics. Ask him about anything - from his early career as a chef to the culinary needs of British troops in Afghanistan - and he will eagerly serve up a feast of food facts.

He describes Compass Group, the world's biggest contract caterer where he has been chief executive since 1999, in terms of a rich blend of statistics and anecdotes.

Yet, despite this enthusiasm and his responsibility for 15m meals a day worldwide, few people have heard of him or his company.

But who hasn't eaten at a Little Chef, stopped off at a Moto motorway service station, grabbed a sandwich at a railway station Upper Crust or bought a burger at an airport Burger King?

He says: 'Everybody knows the brands, but no one connects the dots to see the bigger picture. I don't mind that they don't know the company, just as long as they enjoy the food. After all, everyone remembers their last dodgy meal and where it came from.'

Bailey, 53, left school at 15 because he was 'fed up' and went to work for Ford as a chef. He worked his way up the ladder, via catering giant Gardner Merchant, to join Compass, initially in charge of its North American operations.

'This is still one of the few industries where you can join at any level and become what you want to be,' he says. 'All you need are people skills. And, of course, if it all doesn't work out and I get the sack, I can always go back to being a chef.'

Though Bailey is well thought of in the City, Compass has come under shareholder scrutiny of late. Since the announcement of a merger with Granada in May 2000, and subsequent divorce last February when Compass became public again, Bailey has been working hard to convince shareholders that the deal was the right thing to do.

To reinforce the point, he explains that Granada's tax bill on a direct sale of its restaurant and hotels business to Compass would have been more than £1bn. Compass has since restructured and moved quickly back into the acquisition mode that has characterised its growth from a £160m management buyout in 1987 to today's world-leading £11.25bn contract catering group.

Most important was the £1.9bn disposal of Le Meridian hotels last May, which removed the biggest objection by shareholders to the Granada merger - that half the revenues from the acquired businesses were derived from hotels rather than catering.

Bailey says: 'The worldwide market for contract catering is worth £250bn. We've got just 4% of that. There are an awful lot of opportunities for growth.

'People will always want to eat. All that stuff about us living off pills is nonsense. It will never happen in my lifetime.'

Bailey, immaculately turned out in an elegant and expensive suit, peppers his speech with statistics about worldwide catering and reels off facts about Asia, a major area for expansion where, he says, 80% of companies do their own catering rather than using outside specialists.

'That leaves 20% for big companies such as Compass,' he adds. 'In America, which is the most mature market, the mix is 47% self-operated compared with 53% contracts.

'There are only two companies in the world that can do what we do - and we are one of them. We are in pole position to win new business because people offering major contracts like to deal with big firms. We could treble the size of our business quite easily and still only have 12% of the market.'

The Granada demerger aside, 2001 was a particularly difficult year. 'We've had a lot to contend with,' says Bailey, counting off the problems on manicured fingers. 'There's been foot-and-mouth, various rail issues, and the American tragedy.'

Shares in Compass fell sharply following 11 September because investors feared that US businesses would suffer and trade would drop off at airports.

'Yes, there are fewer people at airports,' admits Bailey. 'But they have to get there so early that they are actually spending more time in the food outlets and spending more money.'

The attacks cost Compass £5m, including the loss of a handful of outlets in the World Trade Centre and the £250,000 spent on free meals for rescue workers. But investors were reassured last month when Compass announced sales growth of eight%.

A further issue is the motorway service station business - the old Granada Motorway Services group renamed Moto - which is not seen as a sexy part of the portfolio. Once more, Bailey is convinced he is sitting on a goldmine.

He says: 'There was always a lot of comment in the past that motorway services were too expensive and not good quality. It was true. But people used to say that about airports, and now people can't wait to eat and shop there.'

Results have been produced with a greater range of food franchises and cosmetic changes such as more emphasis on cleanliness - '82% of customers head straight for the toilet when they arrive, and will leave soon after if they are not clean', reels off our statistician.

Moto is now showing seven% growth and Bailey insists it can be kept up. He is now turning an eye to Continental motorway services and about 300 Government-run catering contracts that will be for sale in the next two years.

That is, of course, in addition to the perceived opportunities for growth and expansion in Japan and Italy, healthcare markets worldwide, and the possibilities for feeding peace-keeping forces, such as Britain's troops in Afghanistan.

It all adds up to a lot of travel for Bailey - and a lot of meals at his company-run outlets on the road. Bailey estimates at least 70% of his time is spent outside Britain.

If he keeps delivering results, it may be some time before the City tells him to pick up his chef's overalls again and return to the kitchen.