Caterers and food service contractors in Australia are on a steady diet for the next few years. By JASON BAKER of IBISWorld.
By Jason Baker
The $3.76 billion catering industry is forecast to grow at an average annual rate of 3.5% during the five years to 2012-13.
For fiscal 2009, forecast good economic and employment growth is expected to lead to real industry revenue growth slightly above that of the five year average.
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Overall, revenue growth is expected to stem from increases in tourism, continuing growth in special and on-going major events and from the contracting out of catering services by the private and public sector. Particular areas of growth include the health, education and defence sectors.
There will be less growth resulting from the mining and industrial sector, which makes up about 50% of the industry turnover, as both the number of new projects and employment contract.
Major caterers consortiums have now evolved (through the forming of strategic partnerships with other business services firms) into major facility managers, including providing catering, security, maintenance and other services to clients. Compass Group is the market leader with 24% market share. Qantas has 14% and Spotless Group 10%.
The industry is expected to remain very price competitive and profit margins will continue to remain slim. By 2012-12 industry revenue will be $4.9 billion.
Over the past five years industry has grown at an average annual rate of 7.7%. In 2003 low economic growth together with reduced international travel to and from Australia continued to impact on this industry.
Stronger economic growth in 2004, together with increased international travel and reduced geo-political tensions was estimated by IBISWorld to have led to strong real industry revenue growth.
For fiscal 2005, despite lower economic growth, the industry was estimated to have continued to benefit from the strong growth in international travel to and from Australia, as well as in domestic travel, which resulted from cheap airfares.
In fiscal 2006, due to low economic growth, the industry’s real revenue growth was estimated by IBISWorld to have slowed to more moderate levels.
Growth was adversely affected by changes in household disposable income, but was assisted by the increased catering requirements of the defence forces and from outsourced contracts.
For 2007 higher economic and employment growth was estimated by IBISWorld to have led to slightly stronger revenue growth, despite increased fuel prices and interest rates.
For 2008, forecast continuing good economic and employment growth is expected to lead to further solid growth in industry revenue. Areas of expansion for this industry have been in the health and education areas, with sporting venues, airports and retail centres