How Elior makes fresh and local viable for the long-term
Source: “Serving up something different for changing tastes.” Charlotte Business Journal. August 25, 2017.
The neighborhood diner almost always has the most engaged staff and the freshest, most local menu. But peek behind the swinging door to the commercial kitchen and you might find an owner struggling to keep the business afloat.
Rising food prices, immigration rules, healthcare costs, long hours, tight margins and limited access to small business loans makes the often-romantic notion of running a catering company or restaurant a grueling business model. Yet millennials spend 44% of their food dollars on dining out, more than any generation before them, making food service a growth industry for the future.
Enter Charlotte-based Elior North America, a culinary management company that’s found the secret to combining the passion of the local chef with the power of a global food company. The result is fresh local food with chefs setting the menu, backed by the purchasing and investment strength of the fastest-growing food service management company in 2016, according to Nation’s Restaurant News.
Elior’s business has tripled in the last three years with market-leading organic growth as well as 11 acquisitions that took them further into new markets.
“We’re much closer to our clients, and that closeness and proximity creates the opportunity to build culinary programs that focus on creative menus and drive a positive experience,” says Brian Poplin, Elior North America’s president and CEO.
The food service management industry includes a mix of a few large players and many small companies providing us with the opportunity to differentiate ourselves. Elior is uniquely positioned as the middle market leader that is “Small enough to care and big enough to make a difference,” Poplin says.
It invests in small, locally owned and operated food service companies and brings in the support structure and financial help many outwardly successful food companies still need. In doing so, Elior takes care to maintain the name and local identity — and often even the ownership — of the smaller company. Those owners many times continue to run the business, but now with the global scale backing of Elior, using its supply chain, its tools and processes.
“We don’t collapse those businesses into ours and cut costs. We strive against bureaucracy,” Poplin says. “We’ve standardized the things that don’t directly impact the customer to create internal process efficiencies. When you push everyone to be “one” that creates a negative experience for the customer.”
The approach has helped the company quadruple its organic growth rate over the past two years. As it buys two $10 million companies, the result isn’t $20 million in additional revenue, Poplin says, but $30 million as the increased scale means additional, often larger customers in the region see Elior as a more viable and better choice.
Keeping the local connections of the business means putting the food and the chefs at the center of the product offerings. Poplin says chefs are empowered — within a budget — to create local menus at every location. Some chefs have herb gardens. Some senior living centers grow their own vegetables.
Food service is a $126 billion market in the US, and Elior is rapidly gaining market share. About 60% of its growth is coming from gaining competitor’s customers and another 40% of growth is from converting customers who once handled food service in house to switch to Elior for culinary services.
Mike Bailey, the long-time US-based CEO of Compass Group, a global food and multi-services organization, started the company as TrustHouse Services Group in 2008 with the acquisition of a small food service management company called Aladdin. By 2013 the company had climbed to $450 million in revenues. That year the company’s private equity partner exited and Elior Group based in France purchased a share of the company. In 2016 the company rebranded to Elior North America, the parent company to 11 food service companies serving markets as far as the Pacific Northwest, south in Mississippi, in the mid-west and northeast.
In the past two years the company has made nine acquisitions, sparking a growth rate in the mid-teens and taking the company further into the education and healthcare markets as well as business dining and cultural attractions.
Elior employs 15,000 people across the family of companies. In May 2016, the company purchased Preferred Meals, which provides meals, snacks and frozen-prepared entrees for contract catering and home delivery, further deepening its presence in this market.
Elior’s family of companies serve a diverse group of diners in K-12 and higher education settings, hospital cafeterias, corporate dining rooms, correctional facilities and cultural attractions. Elior is the largest preparer of Meals on Wheels prepackaged meals in the US, serving such cities as San Francisco, Detroit, Baltimore and Houston as well as homeless shelters in New York City.
Through its special events and cultural attractions business unit, Elior provides fine dining at the National Gallery of Art in Washington, DC, and the Hudson Garden Grill at the New York Botanical Garden, where food can be a driver of satisfaction for the entire experience.
“We are never the initial reason someone comes to a client’s organization, but we can be the reason they come back,” Poplin says.
The company’s relative youth has allowed it to remain nimble and create a positive experience for everyone involved, Poplin says. That momentum has attracted customers who are fatigued with the standard practices of many large food service companies, where the perception is that quality goes down and costs go up.
In Charlotte, Elior will soon increase its own visibility with a relocation from a suburban office building near the airport to uptown’s newest office tower, 300 South Tryon. There it will lease 13,000 square feet for its headquarters and open a new ground-level French brasserie-style restaurant and coffee shop while operating the corporate dining facilities for global asset management firm Barings.