Services

Over recent decades, Egon Zehnder International's Services Practice has been privileged to work with many of the world's leading corporations in the services industry. Clients have included companies from all three major segments: consumer services, such as airlines, lodging, travel, and entertainment delivery; commercial services, such as document management, transaction processing, staffing, and facilities services; and supply chain management services - such as distribution, freight, and logistics.

One of the services industries served by Egon Zehnder International is the catering or food services industry - a well established worldwide business with a number of large international players, as well as many national and regional companies. Several of the international players have grown through acquisition of regional players, leading to international groups that work through local brand names (Compass Group, Sodexho, Aramark and others). Other companies have used their strong brand name and a franchise formula to grow an international organization (YUM! Brands).

Food services companies generally employ large numbers of staff in relation to turnover (see table) and are focused on creating a service experience and atmosphere around food. These companies are extremely sensitive to food security and quality. A recent trend in the industry is for companies to consider outsourcing food production and focusing instead on sales, service, and logistics. This is the "make or buy" paradigm that has been tackled in numerous manufacturing industries in recent years. But while other industries employing large numbers of assembly workers can transfer some of the work to low-cost locations, this is less practicable in the food services industry due to issues inherent in the products, such as food security and decay.

In terms of organizational structure, food services companies tend to opt for market specialization. This applies not only to local players but also to global ones such as LSG Skychefs.

The specialized market segments include:

• Contract catering - "Managing the organisation's lunch room" (business/industry, government, healthcare, seniors, education)
• Concession catering - "Gaining access to specific public spaces" (motorways, airports, railway stations, leisure sites, exhibition centers)

An overview of major international players reveals that the industry is primarily based in Europe and America. Asia does not seem to have developed the catering industry, although Compass Group has targeted Asia as its growth market for the future.

Traditionally, internal promotion or acquisition of good management talent through M&A activity was seen as the way to succeed in the catering industry. However, in recent years key players such as Sodexho Alliance and Compass Group have been struggling to produce healthy financial results, leading to disappointing share performance. The arrival of Jacques Petry at Sodexho Alliance as Senior Vice-President Europe could be a first indication that the industry is gearing up to reenergize its management teams and attract talent from the outside. Succession planning has also emerged as a real need in the industry, as current leaders approach the end of their tenure.

Figure 1: Food services suppliers