Contract caterers’ sales rise 12% year-on-year in fourth quarter of 2023

Britain’s leading contract caterers achieved year-on-year growth of 12% in the final quarter of 2023, the latest Contract Catering Tracker from CGA by NIQ and Bidfood reveals.

It completed four quarters of double-digit growth last year as contract catering continued to build back from the COVID-19 pandemic. However, it also marks a further slowing of year-on-year increases—from 30% in the first quarter to 18% in the second and 15% in the third.

With all four quarters combined, contract caterers’ total sales in 2023 were 18% higher than in 2022. This is despite a drop in the number of outlets served by contract caterers, which at the end of 2023 were 3% fewer than 12 months earlier. The size of the market remains well below pre-COVID levels.

The Contract Catering Tracker from CGA and Bidfood 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, director, CGA by NIQ, said: “Last year was one of recuperation for contract catering, which has steadily and impressively rebuilt its client base after the upheaval of COVID lockdowns and trading restrictions.

“It also indicates a welcome return of staff to the workplaces served by caterers. However, like all businesses in the out-of-home food and drink sector, caterers continue to face severe cost challenges and deserve support from government in the forthcoming Budget.”

Debra Morrell, business development controller for B&I at Bidfood, said: “We’re delighted to see that the sector continues its recovery, although this is tinged with a note of concern as a result of the slight reduction in outlets compared with last year, which echoes similar contractions we’ve seen in other hospitality sectors (although to a lesser degree).

“This has been not only fuelled by the return to offices, which has also brought much needed traffic into city centres, but also the continued buoyancy of leisure, venue and event trade, as well as resilience across healthcare, education and defence sectors.

“This year, economic challenges will continue to squeeze consumer spending, alongside food inflation, which is still present, although not escalating to the same degree we endured last year.

“This will mean operators will need to demonstrate even more ingenuity, resilience and adaptability in their offer to survive and thrive, and we could well see lower growth levels in 2024 compared to 2023.”

Kate Nicholls, chief executive of UKHospitality, said: “Double-digit quarterly growth throughout the year is testament to the ability of contract catering to thrive in adverse economic conditions.

“However, growth slowing throughout the year illustrates just how challenging the cost-of-doing-business is becoming for businesses to navigate.

“As the voice for contract caterers, UKHospitality is continuing to campaign for the Chancellor to introduce measures to mitigate ongoing cost challenges, particularly through a lower rate of VAT and reducing employer National Insurance Contributions.”

CGA’s partners on the Contract Catering Tracker include ABM Catering, Artizian Catering Services, Bartlett Mitchell, BaxterStorey, Blue Apple, CH&CO, Compass UK, Elior UK, The Genuine Dining Co., Graysons, Harrison Catering Services and Sodexo UK.