Caterer Compass anticipates growing appetite as economies reopen

By Yadarisa Shabong

(Reuters) -Food catering volumes will pick up from September as students return to university campuses, audiences attend sports and music events and economic activity recovers, the head of Britain's Compass Group said on Wednesday.

Margins at the world's biggest catering company have increased over the last year as it managed costs and renegotiated contracts, but volumes are flat at about 70% of pre-pandemic levels.

Compass, which serves office staff, school children, seniors in old age homes, armed forces and events attendees across 45 countries, expects revenue recovery to be gradual.

"The real turning point for us will be the full re-opening of the UK on the 21st of June and independence day on the 4th of July in the U.S.," Chief Executive Officer Dominic Blakemore told Reuters.

Compass provided catering at Tuesday's BRIT Awards, the first major indoor music event with a live audience in London in more than a year.

Over the summer months, Blakemore said he expected live attendance at the Premier League and major league baseball games to further help its volumes.

In common with others in the food services space, including France's Sodexo and Elior Group and U.S.-based Aramark, Compass was hit by lockdowns that made people eat at home.

Blakemore said Compass will explore further M&A in the digital sector and has already entered the delivery space with acquisitions, including Feedr in London, Eat Club in the U.S. West Coast and SmartQ in India.

"Compass Group's ability to expand into new categories, such as delivery, will be fundamental to its survival," Third Bridge analyst Harry Barnick said.

Compass' underlying profit of 290 million pounds ($409.74 million) in the six months to March 31 and revenue of 8.6 billion pounds slightly beat analyst expectations.

The group expects margins in fiscal third quarter ending June of between 4.5% and 5% compared with 4.2% in the second quarter and a negative 6% in the same period last year.

Shares in the FTSE 100 company were marginally higher in early trade.

($1 = 0.7078 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich and Barbara Lewis)