On 16th May 2019 Compass Group, UK and Ireland Limited filed with Companies House that they had acquired 75% or more of the shares of Dine Contract Catering. On the same day and since that day, Companies House have been further notified of a number of other changes to Dine Contract Catering being made to restructure the business in line with its new ownership and control.
Like most significant acquisitions in hospitality and catering we look forward to sharing an insight of the strategy behind it with our readers when received.
The UK contract catering sector, or foodservice sector, which seems more commonly used in 2019 has over recent years maintained a healthy level of M&A activity, it seems for many part of their DNA.
Many of the largest foodservice operators today have grown through acquisition bringing many different businesses together. The acquirer will believe they can leverage operational cost savings from scale and/or lower cost to market, delivering higher margins for shareholders. Regional expertise and/or specialist sector skills can command a high premium and then need to be justified to shareholders over time.
Consolidation in foodservice eased slightly in 2018 but already 2019 seems set to accelerate, Sodexo’s acquisition of Good Care Group in April underlining the value of access to specialist sector skills.
Consolidation in foodservice has been a pattern for many years and as such keeping an eye on who’s buying who is key to reporting on the sector. It is also, most of the time, relatively straight forward as the PR for the acquiring business, and more often that not the acquired will send an announcement.
So, when researching for a review of the foodservice sector, we were surprised to find out that an acquisition had taken place completely unannounced, as detailed above.
The foodservice sector’s latest independent being taken over by one of the foodservice ‘big boys’ will be an interesting one to follow, as the number of independents is diminishing.
The logical question has to be…who’s next?