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Strong fourth quarter for contract catering but sales still lag pre-COVID levels

Contract caterers’ sales grew in the fourth quarter of 2022 thanks to a COVID-free Christmas and a steady return to workplaces—but trading remains below pre- pandemic levels.

The latest Contract Catering Tracker from CGA by NielsenIQ and Bidfood reveals that sales from October to December 2022 were 27% higher than in the same quarter of 2021, when caterers were impacted by growing concerns about the Omicron variant of COVID-19. Caterers’ sales in the private sector were up by 32% year-on-year as more people switched back from home-based working to offices.

However, sales in the last quarter of 2022 were 7% below the equivalent period in 2019, when businesses were trading as normal. After adjustments for inflation, sales are significantly further behind the levels of three years ago in real terms. The number of outlets served by contract caterers has fallen by about 14% since late 2019.

The Tracker has signs that contract caterers’ sales are gradually returning towards pre-COVID levels. The three-year comparison of -7% represents the smallest shortfall of sales of all four quarters of 2022, but rising costs for businesses and consumers mean trading conditions will remain difficult in 2023.

CGA’s Contract Catering Tracker aggregates sales from leading operators to provide monthly reports with year-on-year analysis. It offers businesses a valuable benchmarking tool to measure performance across various metrics and market groupings, and participants in the Tracker receive additional analysis in return for their contributions.

Karl Chessell, CGA’s director - hospitality operators and food, EMEA, said: “Contract caterers have battled back well from the havoc of COVID-19 and lockdowns, and sales have steadily grown since the end of restrictions. But sales and margins are now under intense pressure from the soaring energy and food costs that face both caterers and the places they serve. Real-terms growth will be difficult in 2023, and all businesses will be hoping for respite on inflation as the year goes on.”

Debra Morrell, business development controller at Bidfood commented: “It’s good to see that on the face of it, the sector is creeping back towards its pre-COVID-19 levels, although we believe value sales (due to inflation) may mask the true picture in terms of meals served. It’s also difficult to factor in the difference that train strikes, the cold weather and the cost of living crisis may have had on this quarter’s results. We are certainly seeing operators respond proactively through innovation in terms of exciting concepts, and social or sharing offers to encourage uptake and spend. With the right offer, there is always opportunity to compete with the high street.”

UKHospitality chief executive Kate Nicholls said: “While contract caterers continued to face disruption for a third year in a row, particularly through rail strikes, there will be some relief that it didn’t reach the levels of the pandemic and sales somewhat bounced back.

“However, what looks like a successful quarter on paper won’t translate to firms' bottom line due to the intense cost pressures the sector is under. Record food and drink inflation, in particular, is a key factor in why real term sales are lagging behind pre-pandemic levels.

“With 2022 marred by rising costs, contract caterers will be hoping 2023 is the year inflation begins to significantly reduce.”


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