Compass Group plc - an MBO from Grand Metropolitan plc in the early 1990's - aimed to become the worlds leading food-service provider. To achieve this aim the company needed to:-
- Expand internationally.
- Expand into consumer centric food-services.
- Develop identifiable food-service brands.
- Drive through supply chain efficiencies.
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The largest 'captive' UK market that Compass had not entered was that of LEA schools where tendering companies submit a fixed price per meal against a pre-determined service level, i.e. an estimate of the number of meals to be served. Although other issues are addressed by the tender, e.g. healthy menus, food service marketing and capital investment, the emphasis is meal cost.
The increase in purchasing power from supplying 10+ Million meals would immediately improve Compass' negotiating position with suppliers and, should the company win more than one contract, the benefits would increase exponentially. The company appointed a specialist to direct its market entry whilst I appointed a small, internally recruited team to develop operational and financial bid templates.
The first step was to assess the efficiency of the existing food-service operation by:-
- Examining the tender document to identify the service levels required, clarify any contentious or open issues and finally, to summarise the LEA's 'areas of focus'.
- Plotting each school on a map and cross-referencing that with school type, pupil numbers, meals served, staffing levels and food preparation facilities.
- Analysing supervisory and support structures.
- Reviewing the staff's working terms and conditions.
- Organising school visits to meet staff, review menus, check on-site assets, etc.
- Visiting the vehicle depot to check the condition of assets.
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Then the team began to consider alternative organisation structures, food-service methods, menu plans, etc. Additionally, we quantified the financial impact of the Transfer of Undertakings - Public Employees (TUPE), a potential 'poison pill' and an area requiring specialist professional advice from the groups HR, Legal and Pension departments.
After discussions with the main board, the final bid template had these dimensions:-
- Each contract would have a General Manager and support team.
- Schools with <100 pupils located in remote areas would have the bulk of their meals cooked off-site and delivered by special vehicles.
- Schools with >100 pupils located in remote areas would have their meals cooked on-site - facilities permitting - with mobile supervisory staff assuming an operational policing role over staff numbers and hours.
- Urban schools would use a 'split' operation with bulk items cooked off-site and delivered by special vehicles. Each school would manage its own staff.
- No supervisor would look after more than 25 rural schools - less in urban areas - but would assume responsibility for meal delivery planning.
- Centralised menu planning to benefit from short-term purchasing opportunities.
- Capital investment to build central production facilities, purchase vehicles and upgrade on-site facilities in line with required service levels.
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The financial models developed provided the data required for the tender response and also for individual school budgets. At the tender presentation - to the full LEA committee - I presented the financial case.
Although unsuccessful with the first two bids - with consequent review of the bid template, tender response and presentation - Compass was finally awarded the Gloucestershire LEA schools contract.
Key Statistics:-
- Number of schools: 400-700
- Food purchases: £10+ Million
- Additional employees: 1000-1500
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