Viewpoint Interview: A Conversation with Compass Group's Rick Post

John Lawn

Rick PostiglioneRick Post as he is known to colleaguesjoined Compass Group in 1997 as president of the newly-acquired Flik organization. He became president and CEO of its North American B&I sector in1999 and, earlier this year, assumed a new position as CEO-Contract Foodservices for Compass Group North America.

In that role, Post now oversees B&I, Education, Healthcare and Vending. Together, these "core four," as he calls them, represent almost $5 billion of the company's $8 billion in domestic sales and employ about 72,000 associates across North America.

These businesses represent the dominant public "presence" Compass has in the U.S.. They go to market under multiple brands: Chartwells in K-12 and higher education; Morrison Management Specialists in healthcare; Canteen in vending; and in B&I, Eurest, FLIK International, Restaurant Associates, Bon Appétit Management Company, FoodWorks, and Wolfgang Puck Catering.

It was largely under Gary Green, now CEO of Compass Group-Americas, that these individual brand identities were successfully acquired and positioned as market specialists in their respective foodservice segments. The businesses have always operated independently, each with its own CEO. This hasn't changed, although many of them now report through Post.

To better understand his new role, FM recently interviewed Post at a New York City client location to explore some of the objectives behind the recent organizational change. >

Your new position is one that did not exist in the Compass organization before. What parts of the company are considered "Contract Foodservices?" And what was the goal in creating this new position?

Post: "Contract Foodservices covers what we refer to as our 'core four' businesses in the U.S.: Canteen, Chartwells, Morrison Management Specialists and our various brands in the B&I sector. My job is to leverage the strengths of these brands internally, while continuing to nurture their individual cultures. It is not to homogenize any of the cultures that made this a great organization.

"I am not responsible for Sports & Entertainment, [managed by Levy Restaurants] or for the businesses in Latin America or Canada. Also, Bon Appétit still operates autonomously under its CEO, Fedele Bauccio.

"That is an important point, because each of our sectors has a CEO—Scott MacLellan at Morrison, Steve Sweeney at Chartwells, Mike Kiser at Canteen, and so on. They are charged with managing those sectors in ways that keep the cultures intact, to demonstrate ownership of those businesses. It is one reason we have such phenomenal retention at our executive level.

"There is a big difference between having a culture and having a program. Programs can die out in six months. A culture can last forever and is instilled at every level in an organization. That is why is took Rudi and Julie Flik 30 years to build the culture of the Flik organization, and it is the same with Restaurant Associates, Morrison and the others.

"Programs can die out in six months. A culture can last forever and is instilled at every level of an organization."

"When a customer or a prospect asks—'What are we going to get?'—our answer is: a great-food and service culture that is customized to the expectations of that client and the particular sector in which the client operates.

But doesn't the fact that all four are now grouped under Contract Services suggest that some centralization is going on?

Post: "That is not the goal. We have always believed that Compass' strength is driven by the cultures in the individual sectors and my job is to make sure our best innovations are deployed cross-sector, wherever they can provide business solutions.

"We want to leverage the back-of-the-house systems we have in place and, from a people resource point of view, allow individuals to grow and to cross sectors if they want to do so. We do not want our sectors to be silos where there is nowhere to go.

"Even when it comes to global contracts, when we do call on clients as Compass, we still emphasize the sectors and believe we can offer a multi-sector approach that no one else can."

Then what has the grouping meant in terms of the various organizations?

Post: "What we did this year, because the core four were together for the first time, was to bring the managements together in a series of five summit meetings. We wanted to discuss best practice innovations in culinary, marketing, IT systems, sales and HR.

"We want our culinary staff from across the sectors focused on learning from our best chefs at our best operations, tapping the expertise of Wolfgang Puck, Restaurant Associates and Levy Restaurants. We want our sales group focused on business retention strategies and HR focused on seeking and developing skilled labor, and sharing these strategies across brand lines.

"The tighter the business gets, the harder it is to find that specialized labor. Next year, our B&I sector will need 700 new managers.

"The tighter the business gets, the harder it is to find specialized labor ... it is a real challenge to ensure that you have adequate bench strength."

"Right now, we have 120 B&I managers in a 12-14 week project readiness course. Before they get the keys to their stores—I call them stores, rather than units—they really have to learn their trade.

"Our industry turns over a lot of managers in this business and it is a real challenge to ensure we have adequate bench strength. As an organization, we need to continue to invest in training our people and part of my new role is to find ways to address this challenge across the sectors. What we call our Centers for Excellence [are an important part] of that strategy, and we now have 45 CFEs across the country.

"These are what we believe are our 'best practice' accounts in each region. If we are going to hire a cashier, he or she will train at a Center for Excellence in that region to get certified in our procedures. We introduce basic retail skills the same way—it is how you cascade programs through a business and is a tool for driving [operational] consistency."

Isn't that a fine line, trying to encourage the sharing of service strategies and offerings while still retaining the differences that make these operating companies unique?

Post: "Certainly it is not always easy. But when we have common goals, like wellness, it makes sense to take a program like Balanced Choices, which promotes more healthful dining options, and to offer it across the sectors. We want the program to retain its integrity while also encouraging each sector to customize it for individual business needs.

"My job is also to find ways to grow people. We have spent a lot of time and invest a lot of money to focus the retail and culinary skills in our groups. Sometimes that means facilitating [joint ventures]. For example, who would have ever thought that RA and Puck Catering would team up to win contracts for the Georgia Aquarium, for the Boston Science Museum?

"Five years ago, you would never have imagined them ever working together, let alone combining their expertise. Yet it is in fact a wonderful combination. That is the kind of thing we want to facilitate."

Let's turn to business dining, which has had its share of challenges in recent years. How is B&I evolving as a result of those pressures?

Post: "A lot more companies have a significant portion of their employees working from home and on the road. We can't expect our customers to come to us anymore—we have to go to them. We have focused more on small store solutions, delivery services, catering solutions. We are going places we have not been able to go before.

"Another change is that we are often managing a lot more than just a P&L or subsidized account these days. We manage more real estate than ever before, and need to manage it very efficiently, and to advise clients on how they can manage it more efficiently.

"For example, we find ourselves advising clients to take under-utilized seating areas and convert it into conference room space. Many clients have employees who increasingly are bringing their food back to their desks or work areas.

"We look at some facilities that are overbuilt relative to the current employee base and may advise that client in terms of a foodservice delivery model it may wish to consider in lieu of the traditional one.

"Our Outtakes initiative is one way we've approached that. It is a concept that has evolved since we first introduced it—it is now more of a kiosk solution, a remote site operation run by one or two people. It offers Compass branded take-out foods and take-home dinners and is completely mobile. It can be applied across our sectors and while it is a brand concept, it is really designed primarily as a business solution to help clients reduce their costs and their subsidy dollars.

"Another initiative we're introducing is our branded take-home meal program,with Wolfgang Puck and Dream Steam Cuisines. Dream Steam is a very exciting offering that will be previewed in the next few months. [editor's note: see "Compass Gets Steamed" on page 46].

"We have some locations where particular populations do not warrant a traditional foodservice. Outtakes have been put in place instead and sometimes generate the same revenues as previously existed. There are 125 Outtakes kiosks in place right now and probably another 100 are booked to go in over the next year. Probably a quarter of those are outside of the B&I sector."

What about the contracts you sign—are they changing as well?

Post: "B&I contracts are becoming very much like signing a lease. You are partnering for a long-term relationship. Because of that, the contracts are more defined. The criteria are based more on performance and risk/reward than in the past, and I look at that as a good thing, an opportunity.

"B&I contracts are becoming very much like signing a lease...We manage more real estate than ever before."

"You know, all providers learned a valuable lesson after 9-11 in terms of the way we approached catering in corporate dining. We all went into a deep trough and all had to do without the catering spend we had forecast. The lesson was that we must not rely on catering, that you have to drive your basic business with daily participation and the opportunities it has to offer.

"My point is—if the environment affects your business, you need to have the flexibility to continue to deliver your services to the client in the most efficient way possible. That is how you earn your keep."

In recent years there's been a lot of talk about embracing a "P&L" culture at the account level, and what it takes to do that on the front lines...

Post: "I grew up in the retail business. Everyone talks about having a retail mentality, but you really don't understand what that means until you feel that you really own something. Having a sense of ownership means you are always looking for where the next sale is going to come from and knowing that you need that sale to pay your next bill.

"A sense of ownership means you are always looking for where the next sale is going to come from and knowing that you need that sale to pay your next bill."

"As our chefs and managers move around the company, creating that sense of ownership is a big part of having a retail perspective. It doesn't matter if you operate a P&L or subsidized business. If there is no ownership at the unit level, your chances of operating a successful business are nil!"

B&I is traditionally the largest market for management companies. What do you say to those who see it as facing growth constraints?

Post: "I still see a lot of opportunity out there. Just look at numbers like those in the SFM benchmarking survey—average lunch participation is 40 percent. There is a lot of opportunity to increase that percentage. In B&I, organic growth comes from increasing sales in existing accounts.

"Driving participation up four or five percent can be a very profitable scenario, but it means 'beating the street.' That's where our real competition lies.

"There are reasons that McDonalds is spending millions on its new premium coffee program, why chains like Dunkin' Donuts are coming after what has traditionally been our breakfast business. If these kinds of organizations can find opportunity among our customers, there is no reason we can't. I am very optimistic about corporate dining in the industry as a whole."