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Catering Firm Compass Says It Expects Its Operating Margin To Increase By Approximately 130 Basis Points In The Current Quarter

By Dave Simpson

Catering firm Compass Group has forecast better margins in the second quarter than in the first, as it trimmed costs to cope with an expected hit to revenue from most schools and offices remaining shut.

The world's largest catering company had a tough 2020 as lockdowns ate into the revenues of food services contractors, including France's Sodexo and Elior Group as well as US-based Aramark.

To soften the coronavirus blow, Compass has had to cut jobs and manage its food costs by "careful" menu planning, and by reducing suppliers and the number of products it buys.

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Compass said that its operating margin for the second quarter that ends on March 31 is expected to increase by approximately 130 basis points to approximately 4%, compared with 2.7% in the previous quarter.

Its half-year organic revenue is expected to drop by 31%, with the UK-based company warning that foreign exchange translation could impact revenue by £456 million.

In the trading update outlining its expectations for the second quarter and half year, Compass said that it has been operating at approximately 71% of its 2019 revenue in both the periods.

"Controlling The Controllable"

"We are controlling the controllable by managing our costs, adapting our operations and resizing our business," the company, which serves office workers, school kids, seniors in old age homes and armed forces across dozens of countries, said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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