The continued return-to-office and spending at sports venues drives North American growth for Compass Group in 2024

U.K.-based foodservice provider Compass Group said that in 2024 diners continued to return to office as the business and industry in the U.S. grew, in part thanks to new business. Consumers also attended more sports and entertainment events and spent more money at those venues. Spending and attendance also increased at education sites.

Compass Group, which recently released its fiscal 2024 full year results, saw organic revenue growth of 10.5% in the U.S., and 10.6% for the company as a whole in 2024.

“B&I saw the highest rate of organic and net new business growth last year. Some of this is due to change in consumer and client trends, the greater appreciation of food and our attractive value versus the High Street,” said Dominic Blakemore, CEO of Compass Group, in a call to investors on Nov. 26. “The combination of the strength of our business and favorable market dynamics give us confidence in achieving higher net new business growth than our historic rates.”

While the company attributes much of its U.S. growth to success in the business and industry and sports and leisure segments, growth rates were high in all sectors. The foodservice provider also saw a lot of opportunities in the healthcare and education sectors.

Throughout the year, the company noticed strong outsourcing and market trends, which contributed to its growth. Food, overall, has grown in importance to both consumers and clients, said Blakemore.

“Food is more valued than ever by clients and consumers. Allergens, dietary requirements and sustainability initiatives continue to add to operational complexities,” he said. “Major challenges such as heightened inflation put pressure on organizations, leading to further outsourcing.”

This trend of increased outsourcing has benefited the company due to its scale and expertise, which has helped it to win new contracts, especially with first-time outsources, said Blakemore.

“As a result, we're confident we can sustain higher organic growth with a robust sales pipeline and strong retention,” he said.

The foodservice provider maintained a strong client retention rate in the U.S. at 96.4% for the year. The company saw a slight dip in the first half of the year but recovered in the second half. Blakemore said that moving forward, Compass Group expects to see a trend of continuous improvement when it comes to retention.

Throughout the year, the company has maintained a focus on recruitment, using new tools and strategies to source new employees.  In the U.S., the company has used targeted campaigns, process automation, AI as well as other efforts to continue to find employees.

Sustainability was also a focus for Compass Group this year, as it made progress on its commitment to achieve net zero across its global operations by 2050. The company uses culinary innovation, collaboration and partnerships to make strides on its goals. The foodservice provider uses a waste management platform called Waste Not 2.0 to assist chefs in tracking food waste. And, in an effort to motivate team leaders to improve on sustainability efforts, the company links a food waste-related key-performance indicator to the annual bonus of executive directors and senior management.

In 2024, Compass Group did see an increase in its Scope 1,2 and 3 emissions, which it attributes to new business. But, its overall greenhouse gas intensity ratio, normalized for revenue growth, decreased by 4% compared to the year prior.

Looking forward

The company said it believes it will maintain growth in the U.S. under the new presidential administration. Blakemore said that it could potentially benefit if any legislative measures encourage onshoring. He also said that Compass does not foresee any issues when it comes to changes around nutritional requirements.

“I think we've always responded incredibly positively and very quickly and often that complexity can be, you know, a further accelerant of outsourcing,” he said. “We're going to wait until we see policies enacted, but we're not a business that's exposed to importing in the US, and so we wouldn't anticipate tariffs having a major impact on our cost space, other than through secondary supply chain factors.”

Overall, the company believes it had a strong performance in 2024.

“We're sustaining high revenue and profit growth across all regions, with strong organic revenue growth and good margin progression, importantly, unit margin recovering to pre-pandemic level,” said Petros Parras, chief financial officer for Compass Group, during the conference call. “Every region delivered double digit improvement in operating profit.”

Looking forward to 2025, Petro said the company estimates a high single digit operating profit growth, driven by 7.5% or higher organic revenue growth.

“We're excited about the opportunities, and we're really focused now on delivery,” said Blakemore.

2024 seems to have been a good year for the sports and entertainment and corporate dining segments as a whole, as fellow foodservice providers Sodexo and Aramark also recently reported success in those segments.

For Pennsylvania-based foodservice provider Aramark, U.S. growth in 2024 was driven by higher attendance and spending at stadiums and increased diner participation in corporate dining.

And France-based foodservice provider, Sodexo, saw success in corporate dining due to the continued return-to-office, strong performance in hospitals and spending at events and airport lounges.

All three companies are predicting organic revenue growth in 2025 to fall in the 6-11% range, with expectations for strong new business.