Healthcare Catering - UK

Published by: Mintel International Group Ltd.

Published: Jun. 1, 2008 - 55 Pages

Table of Contents

Issues in the Market

Main issues

Definition

Abbreviations

Market in Brief

Healthcare market returning to strength

Food costs going through the roof

Sustainability is the word

Quality not cost

People are getting older and richer

Bed numbers are falling but opportunities abound

Internal Market Environment

Key points

Food prices

Figure 1: Indices of global food and beverage prices, 1998-2007

Figure 2: Food costs as a percentage of turnover in the contract catering market 1993, 2000-07

Government adds to the pressure

Figure 3: Prices paid by public sector organisations for food staples by provider, 2006

Hospital beds falling

Figure 4: NHS: number of hospital beds, 1985-2005

But are falling bed numbers impacting revenues for the healthcare catering sector?

Nursing home crisis

Food quality

Healthy eating

Figure 5: Agreement with selected lifestyle statements, 2003-07

Government funding

PFI funding causing problems for contract catering

Sustainability

Food miles

Locally sourced produce

Case study - Cornwall food production unit

Initiative

Problems

Outcome

Energy

Figure 6: UK fuel prices for the industrial sector, 1980-2006

Labour costs

Figure 7: Labour costs as a percentage of turnover 1993, 2000-07

Broader Market Environment

Key points

Figure 8: Trends in personal disposable income and consumer expenditure, 2003-13

Figure 9: Forecast adult population trends, by socio-economic group, 2003-13

Figure 10: Forecast adult population trends, by lifestage, 2001-13

Figure 11: Trends in the age structure of the UK population, by gender, 2003-13

Competitive Context

Key points

Figure 12: Competitive context of the contract catering market, 2007

FMs dominate

Strengths and Weaknesses in the Market

Strengths

Ageing population

Increased focus in quality

Franchising

Weaknesses

Food prices

Decline in outlets

Political sensitivity

Market Size and Forecast

Key points

Figure 13: The healthcare contract catering market, 2003-13

The past market

The present market

The future market

Meals served starting to rise again

Figure 14: Number of meals (m) in the healthcare market, 1991, 2000-07

Sharp decline still being seen in outlets

Figure 15: Total number of healthcare outlets served by contract caterers, 1991, 2000-07

Factors used in forecast

Segment Performance

Key points

Figure 16: Number of outlets and meals served in healthcare contract catering sector, 2007

Contract type

Figure 17: Types of catering contract (total market including healthcare), 2005-07

Companies and Products

Key points

Figure 18: Number of outlets in which FM companies invested, 2007

Accent catering service

Apetito

Aramark

Compass

Figure 19: Financial performance of Compass Group plc, 2007 and 2006

Elior

ISS

Figure 20: Financial performance ISS Group, 2006 and 2007

OCS

Sodexo (formerly Sodexho Alliance)

Figure 21: Sodexo: Global healthcare operations, 2007

Use of Hospital Catering

Key points

Figure 22: Hospital catering usage, March 2008

Socio-economic implications

Appendix: Use of Hospital Catering

Figure 28: Hospital catering usage, by detailed demographics, March 2008

Abstract

A period of decline seems to be coming to an end in the healthcare contract catering market as a number of positive trends begin to impact the sector. These include an ageing population and rising wealth, which are both fuelling growth in the nursing care market. Meanwhile, increased productivity, innovation and improving quality are raising standards in the industry. As a result, meals served have started to rise again, after falling for much of the decade, and should continue to do so for the remainder of the forecast period.

However, there are pressures going forward. The most severe is the huge rise in food costs. As most contracts in the industry are fixed, it is difficult to pass these costs onto clients. Also, the PFI market, which has been a strong driver of growth, has begun to dry up as the government tightens the purse strings. Also, specialist caterers are being pressured by Facilities Management (FM) consortiums, which are frequently preferred as they can offer a wider array of services. Meanwhile, hospital bed numbers continue to decline as treatment improves and fewer people have to make overnight stays.

Consequently, the number of outlets contractors operate is continuing to fall sharply, as smaller hospitals are closed in favour of larger institutions. There is hope that the worst of this rationalisation process is over, and that many of the less lucrative contracts have now been dumped in favour of higher-yielding agreements. With 75% of hospitals still using in-house catering teams, there should be plenty of space in the market for contractors to make an impact.

The hypothesis for this report is: “has the decline in hospital beds created an unprofitable healthcare catering market?”

Key themes of the report:

• How are soaring food prices impacting the market?
• What developments have there been in terms of government funding?
• How is the industry coping with falls in the number of nursing homes?
• How are food quality issues affecting the market? Is cost no longer the primary consideration for clients?
• How are FM consortiums pressuring the market?
• What is the industry doing to ensure environmental sustainability?

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