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Feeding frenzy in a Pounds m business

Rentokil is now the biggest supplier of school meals in Britain. Stephen Hoare reports

You may turn your nose up at watery greens and soggy chips, but how do you judge whether your school meals are giving you value for money? Since schools took over financial responsibility for virtually every service that used to be provided by the local authority, they are in many cases buying in direct from private suppliers. Grant-maintained schools have even more links with private-sector suppliers.

But ask those same schools about their catering and they shrug their shoulders. Because food is low on their list of priorities and regarded as a no-go area by many, the majority of schools still contract out their catering to the local authority. Better the devil you know.

However, local authorities, too, have been opening the door to private contractors. Under compulsory competitive tendering, quite a few local government catering operations have been snapped up by one of the big private suppliers - such as Gardner Merchant, Chartwell or Initial Catering Services. According to industry sources, 14 to 15 per cent of state schools' catering is by private contractor, but in the grant-maintained sector the proportion rises to 35 per cent.

Chartwell, a division of the Compass group, provides meals for all phases from infants through to higher education, giving it an annual turnover of Pounds 76 million. The managing director Mike Bond says: "There's a big difference of approach between state schools and independent and grant-maintained. The state sector is very much driven by cost. Other sectors are quality driven. The mix of pupils, their age, and the school's location and policy all have a big impact on the till."

Initial Catering Services - part of Rentokil, a leading business services group - is Britain's biggest private school meals provider. With an Pounds 80 million turnover, the company serves around 3 million school meals a year at 3, 500 schools. The business is built around big local authority contracts usually lasting four to five years.

Initial's business development director, Angus Henry, says: "It's a high-volume, low-margin business and it's highly specified. We're able to cut costs on local authority run catering typically by 10 to 15 per cent because we have the bulk purchasing power of a big national company, and because of our management expertise."

But fixed-price lump-sum contracts are risky for contractors like Initial. Being half a percentage point out on a tender can make the difference between running at a profit and barely breaking even.

Initial Catering Services runs the canteen for All Saints Junior in Fleet, as part of a contract for schools in north-east Hampshire. Under compulsory competitive tendering, Initial picked up four out of 15 schools catering contracts for the local authority. Out of 406 on the roll, Initial provides a school dinner for 190 pupils while the rest have sandwiches in the hall.

Karen Davis runs the school kitchen with four staff. She says: "We're offering Hampshire's heartbeat menu - a healthy option with every main course. We only fry chips once a week and all our main meals are oven-baked. We use sugar-reduced baked beans and wholewheat flour." Initial boosts its canteen turnover with the sale of desserts and drinks to the non-school meal children at lunchtime, and by selling snacks during break.

"At break we offer a healthy option of freshly baked bread rolls with toppings - we don't sell any sweets or biscuits," says Karen Davis.

Because of the tight specfications and the wafer-thin margins needed to secure contracts from the competition of the council's own in-house operations, schools can be a tough nut to crack for commercial operators. In secondaries, many pupils leave the school site during lunch break. And, if the school serves a local catchment area, the temptation for pupils is to return home for a snack. Rural schools and primaries do not share this problem.

While the big companies offer a standard package, there can be gains for a school going it alone. Hall Green, a grant-maintained secondary school in Birmingham, decided to run its own catering operation two years ago and has never looked back. The catering staff are now employees of the school. Under the school's former contract with council-run Citiserve, 200 to 250 pupils out of 750 ate school dinners; since going it alone, the numbers have doubled.

Peter Whittaker, the headteacher, says: "Quality and choice has gone up and we have even been able to reduce our prices slightly. Far from making a loss as we were warned, we now make a small profit which is ploughed back into improving the facilities." Mr Whittaker attributes Hall Green's success to having an enterprising manageress.

She is Pat Thomas who remains modest about her achievements. "If we haven't got what they want on the menu we'll make a note of it and include it next time. We have 40 choices of main meals as against 20 to 25 meals under the old Citiserve. The kids' favourites are curry, cheese and potato pie, cheese flans and salads." The canteen has also branched out into provide snacks during morning break - toast, hot and cold drinks - and not a vending machine in sight.

Serving 500 meals a day is a logistical challenge which Mr Whittaker overcomes by a strict rota system and queues. The canteen also services 35 statemented disabled pupils, who are assisted in their eating by care assistants.

Mr Whittaker has found another important spin-off is the hospitality - buffets and snacks laid on for staff training sessions, parents' evenings, governing body meetings and for social events. He says: "Being able to offer hospitality to people puts us in a different ball game. The catering has improved beyond all measure."

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