Published on 12/11/2015 by Punchmedia

Catering Services Becoming Big Business

The Catering Services industry has become one of Australia’s strongest growth industries over the past five years according to a recent IBIS World Report. Over the five years through 2014-15, Catering Services has risen by an annualised 3.6%, to a total of $5.9 billion. This performance includes growth of 4.3% in 2014-15, driven by rising demand from key markets such as businesses and governments, improved attendance numbers at major sporting and cultural events and favourable domestic and international airline travel patterns.

Profitability

Industry profit margins have increased substantially over the past five years. Efforts to maximise labour flexibility and meet fluctuating demand levels have been particularly successful in maintaining profitability. This growth in profit has been supported by strong revenue growth over the past five years and concerted efforts by operators to reduce costs and increase operating efficiencies. Consistent demand from the Mining division and airlines, coupled with greater outsourcing by businesses, has also ensured growth in both revenue and profit over the past five years.

Demand Conditions

Industry revenue growth has been solid over the past five years, and volatility has remained relatively low. Increased outsourcing across a range of downstream industries has provided a steady increase in demand for industry services. This move towards external catering has been supported by increasing regulatory requirements for the provision of food services. Businesses tend to find outsourced catering more desirable than navigating food safety laws through in-house catering. This trend has aided revenue growth as more businesses, schools and government departments have turned to catering service providers.

Catering Employment and Establishments

Industry employment is forecast to increase by an annualised 1.7% over the five years through 2014-15. The increasing use of casual and part-time staff to cover peak customer service periods has contributed to higher employment levels. Total industry wages have also trended upwards over the past five years as the industry recovered after the global financial crisis, due to higher employment levels and general wage growth across the economy. Enterprise and establishment numbers have both grown over the past five years, supported by increased demand.

 

Full-Service Contracts

Some major caterers have evolved into facilities management companies that offer a diversified range of services, including security and cleaning. Many have achieved this by seeking strategic alliances with other specialist firms in neighbouring industries, or by diversifying their own operations. Others have sought to expand into food court concepts to deliver food in shopping centres and other permanent locations. Some international caterers are also expanding their branded food court concepts into restaurants at other locations. These full-service contracts are particularly attractive to large clients as they are able manage a range of operations under one contract. Large tenders from major government institutions and corporations increasingly require catering services to be combined with cleaning, security, maintenance and other services in the one contract. Therefore, the ability to offer additional services is becoming more important for industry companies that wish to tender for large contracts. Opportunities for expansion exist, particularly in the health and education areas. Sporting venues, airports and retail centres are also proving to be important growth areas.  

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Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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