Sales at major foodservice providers increased in the first half of the year as consumers spent more money at concerts, catered more food and returned to the office.
Philadelphia-based Aramark reported a 19% increase in organic revenue growth compared to the year prior, with pricing contributing only 6%. Meanwhile, Sodexo reported growth in North America of 16. 4% in its most recent quarter. Both attributed the growth to spending at convention centers, concert venues and corporate dining. Additionally, in a call to investors on May 9, Aramark said retail and catering drove business within the collegiate hospitality segment.
Inflation has been a challenge throughout the beginning of the year, according to Aramark’s chief financial officer, Thomas Ondrof, who noted that the client pricing lag remained an issue within the education and corrections segments. However, the company expects to see that challenge settle as pricing adjustments catch up with inflation. In addition, John Zillmer, Aramark’s CEO, noted the company is seeing business recovery as consumers return to work in the business and industry segment.
“We are confident in the momentum that continues to build in both global FSS and Uniform Services to deliver long-term sustainable and profitable growth,” said Ondrof. “A strong pipeline of new business opportunities, the positive effect of ongoing pricing initiatives against sequentially moderating inflation, a stabilizing supply chain and the benefits of actions taken in the first half to make the organization more efficient and effective, give us confidence as we head into the second half of the year and set the foundation for fiscal '24 and beyond.”
At Sodexo, foodservice organic growth was up 20%, which indicates a full recovery post-COVID, said Sodexo’s CEO Sophie Bellon in a call to investors on April 5. In addition, organic growth in the education sector increased 10.7%. Sodexo’s chief financial officer, Marc Rolland, said growth was partially offset by the reduction in government waiver eligibility for students. However, growth in universities was strong with higher boarding enrollment as well as strong retail and catering sales. In the healthcare sector, organic growth was up 9.4%, which was driven by price increases, recovery in retail volume and increased senior home occupancy.
In addition to reporting strong numbers for the quarter, Sodexo announced plans to spin off and list the benefits and rewards segment of its business. Bellon noted that the spin-off will help each company to focus on their priorities.
“These two companies should be able to enhance performance and strategic execution, benefiting from the financial flexibility, strong investment grade ratings, and direct access to the market, make the relevant acquisition and attract the best suited investors,” said Bellon.