Compass Group

Compass Group

Compass Group

Q1. Evaluate Compass's strategy and performance with particular reference to the period 2001-2005

The business has its origins in a company which was founded by Jack Bateman in 1941 as Factory Canteens Limited and which subsequently became known as Bateman Catering. Bateman Catering and Midland Catering were acquired by Grand Metropolitan in 1967 and 1968 respectively. A management buy-out from Grand Metropolitan followed in 1987 when the Compass Group was formed. The Company was first listed on the London Stock Exchange in 1988.

In July 2000 the Company merged with Granada plc as part of a planned strategy to separate the media and catering interests of the latter. The two companies demerged in February 2001 to form Compass plc and Granada Media.

In April 2005 Compass sold its roadside and travel catering businesses for a combined £1.82 billion. The transaction included the sale of 43 Moto motorway service areas to Australia's Macquarie Bank for an estimated £600m. Compass's Select Service Partners (SSP) travel concessions business was sold to companies controlled by private equity firm EQT Partners, which is owned by Sweden's Wallenbach family, for an estimated £1.2 billion.

In 2009 the company made further acquisitions including Kimco and Lackmans in the USA, Plural in Germany and several McColls retail site leases in the UK.

The Compass Group owns the following brands and businesses: Eurest, Bon Appétit Management Company, Restaurant Associates, Morrison Management Specialists, Scolarest, Eurest Support Services (ESS), Crothall, Levy Restaurants, Canteen Vending, Medirest, Chartwells, and Keith Prowse Corporate Hospitality.

Compass Group operates several owned brands including Trattoria Pizza, Mondo Subs, (UK & USA) Origin Foods and Spice of Life (UK Hospitals) as well as operating Costa Coffee and Starbucks under license.

Compass Group also operates several owned service systems including Steamplicity, TrimTrax and Core Concepts.

In 2005, subsidiary Eurest Support Services won contracts to provide food to United Nations peacekeepers in Liberia, valued at $237 million.

Alexander Yakovlev, the UN procurement officer, and Vladimir Kuznetsov, head of the UN Committee for Administrative and Budgetary Issues, were arrested and indicted after taking nearly $1 million in bribes from Compass.

Competitors Es-Ko and Supreme Foodservice AG initiated lawsuits claiming violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, the Sherman Antitrust Act and New York State's Donnelly Act regulating free trade. Federal investigations are underway and the case has been referred to the Serious Fraud Office (UK).[10]

After its own three-month internal investigation, Compass declared it had discovered "serious irregularities" in its UN business, but that these were limited to "only a few individuals" who were dismissed: Peter R. Harris, Andy Seiwert and Doug Kerr. While Compass refused to make public its investigation, CEO Michael Bailey stepped down in June 2005.

Under the chairmanship of Francis Mackay, Compass has led the move of contract catering from an institutional canteen culture into the modern animal it is today. Mackay spearheaded the use of high-street (and company owned) brands in the workplace, adopted the marketing techniques of the commercial world and was one of the first to expand into new areas ...