Compass Group, the world’s largest foodservice contract management firm, has reported an overall revenue jump of 42.5% (37.5% organic) for its 2022 fiscal year, ended Sept. 30, over fiscal 2021, with fourth quarter revenues sitting at 116% of its 2019 Q4 figure. For the company’s North American unit, by far its largest with 66.5% of the total in 2022, the increase was even more substantial, up 53.6% (44.1% organic) led by a 244% jump in Sports/Leisure business and 74% in B&I while Education (including both C&U and K-12) increased 54% and Healthcare/Seniors, the unit’s largest by revenue, was up 18.6%.
Compass also noted “excellent” net new business of 7.5% and a client retention rate of 96.4% (a new record for the company). It cited “strong contributions” from North America and Europe in new business wins and suggested that the first-time outsourcing market “remains buoyant,” accounting for about 45% of the new business wins.
In North America, net new business growth was 9% “reflecting both strong new business wins and continued high retention at 97.1%,” the company news release stated, with growth “broad based across all sectors, with strong wins from first-time outsourcing.” B&I and Sports/Leisure “benefited from continued volume recovery throughout the year, reflecting the return to the office and live events, together with higher per capita spend,” the release added. “Both sectors delivered strong double-digit net new business growth,” while Education, “despite lapping strong reopening numbers last year, continued to rebuild volumes during the year and the resilient Healthcare & Senior Living business continued to perform strongly.”
In individual markets for the company as a whole in fiscal 2022 compared with 2021, Sports/Leisure organic revenues were up 126.5% while B&I increased 47.4%, Education 41.3% and Healthcare/Senior Living 11.2%. Defense/Offshore/Remote, a minor part of North American operations and only about 8% of the company’s business as a whole, was up 9.5%. All but B&I also saw a revenue total for the year that exceeded pre-pandemic fiscal 2019, while B&I was at 90.9% of fiscal 2019 revenues, increasing steadily each quarter culminating in 106.1% of 2019 Q4 in 2022’s Q4.
For 2023, Compass expects organic revenue growth of around 15% weighted toward the first half of the fiscal year.
“Our strategic focus is on food, with targeted support services,” the company’s release commented. “There remains a significant structural growth opportunity from first-time outsourcing, as around half of the market is still self-operated. As the operating environment becomes increasingly challenging due to inflationary pressures, increased client demands and other additional complexities, we have a clear strategy to capture the resultant acceleration in first-time outsourcing based on our focus, scale and expertise.”
Going forward, Compass says it expects significant competitive advantage from its existing market position.
“Being the largest global player, our scale in procurement and focus on cost efficiencies give us competitive advantages that translate into greater value for clients and consumers,” it noted. “Our sectorised and sub-sectorised approach enables us to provide a tailored offer to meet changing client requirements. We are continuing to invest in our market-leading propositions in digital and ESG which are clear growth enablers in the food services market.”
Group CEO Dominic Blakemore echoed those expectations and celebrated the 2022 numbers in announcing the fiscal 2022 results.
“The Group’s performance surpassed our expectations both in terms of net new business growth and base volume recovery, with Business & Industry now operating above its pre-pandemic revenues,” he said. “The strong growth trends seen in the first half have continued, with net new business accelerating through the year in all our regions. Our clients are continuing to face operational complexities and inflationary pressures, which are driving increased outsourcing, and we are successfully capitalising on the resulting growth opportunities.”
He added that “North America continues to perform strongly,” and that “thanks to the hard work of our teams across the world, Compass has emerged from the pandemic as a stronger and more resilient business, reflecting our clear strategy and market-leading growth enablers. While the macroeconomic environment is uncertain, we are working in partnership with our clients to mitigate inflationary pressures and supporting our colleagues during this challenging period by offering financial support and other benefits.”