Sodexho : Overview

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Sodexho

A Corporate Profile

By Corporate Watch UK
Completed February 2004


1. The company

  • Overview
  • Industry Areas
  • Market share/importance
  • History


  • Sodexho-Alliance S.A.

    "Sodexho's mission is to offer services that contribute to a more pleasant way of life for people of all ages, whenever and wherever they come together."1

    Overview

    Sodexho is a food services and management services company who tout their 'services' to everyone from multinational business to National Health Service (NHS) trusts. You are most likely to have come across Sodexho in your school or university canteen, or else when you fancy a snack whilst visiting a museum, art gallery or hospital. However, behind the boiled vegetables and dinner ladies with hair nets, lurks an altogether more sinister multinational.

    Campaigners are most likely to associate Sodexho with its ill-fated government contract to provide benefits to asylum seekers in the form of vouchers. This potentially big money spinner for Sodexho turned into a PR nightmare as the widest range of campaign groups imaginable persuaded the government to abandon the scheme. Unfortunately, Sodexho has not been put off the asylum business, as you will see below. Sodexho has also had its fingers burnt in the USA, where it ran 'correctional facilities' which were the target of a concerted and successful campus-wide campaign. Despite eventually withdrawing from the prison industry in the USA, profits speak louder than bad PR, and it is still heavily involved with the prison industry in the UK and Australia.

    Sodexho's other controversial contracts include feeding the U.S. Military in their various endeavours in the Gulf and elsewhere, as well as assisting Royal Dutch Shell in exploiting oil on Sakhalin Island, in the Far East of Russia.

    Sodexho has also been criticised not only for opposing organised labour, but for going one step further. In 1998, its handbook for managers on how to fight unions in the workplace was leaked to the International Hotel Employees and Restaurant Employees Union.

    So war, prisons, anti-unionism and oil. All this and so much more.

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    Industry Areas:

    FOOD AND MANAGEMENT SERVICES: supply of food and management services to companies, public agencies and institutions, hospitals, clinics, retirement homes and educational institutions. Management services include cleaning, technical maintenance, security, grounds keeping, medical surveillance and leisure services, as well as the management of on-site clubs & retail outlets.

    REMOTE SITE MANAGEMENT: provision of services worldwide to people working on-land and offshore on oil rigs, major construction projects, mining facilities and forestry operations.

    SERVICE VOUCHERS AND CARDS: supply and processing of vouchers for food, petrol, gifts, work clothes, toys and childcare services.

    LEISURE SERVICES: management of public restaurants, event catering, river cruises, sports facilities, spas, cultural institutions and convention centres.

    In its 2001/2002 Annual Report, Sodexho illustrates the breakdown by industry in which it operates.2

    • Business & Industry 44%
    • Healthcare 18%
    • Education 24%
    • Seniors 6%
    • Remote Site Management 5%
    • Service Vouchers and Cards 2%
    • River & Harbour Cruises 1%
    • Prison services account for 1%

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    Market share/importance

    Depending on who you listen to, Sodexho is either “the world’s largest food and management services company”,3 or the world's second-largest caterer after the UK-based food and management services group, The Compass Group.4 Sodexho is also, according to its website, the world's largest remote site management company. According to its annual report, Sodexho operates in 74 countries.

    Sodexho's website boasts that “three out of every four FTSE 100 companies rely on us for cost-effective solutions to their employee or hospitality catering, or to deliver support services including cleaning, reception, switchboard and help desks, mailroom, reprographics and grounds maintenance.5

    Sodexho in the UK became the leading catering contractor for local authorities, health service trusts and government agencies in the UK when it acquired Gardner Merchant.6 It has benefited greatly and will continue to benefit from the privatisation of public sevices which is now widespread in the US as well as in the UK under the New Labour government. It is one of a very few companies well placed to run privatised prisons, as well as supply 'services' in hospitals, schools and other public institutions.

    Sodexho in the UK and Ireland is the second largest single country contributor (14%) to the Sodexho Alliance group revenue after North America (49%).7 They are also the world's leading provider of river and harbour cruises.8

    A note on the name, Sodexho

    Sodexho is an acronym that comes from a French phrase, Societe d'EXploitation Hoteliete, which loosely translated means a company of service and hospitality.

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    History 9

    Founded as a ship supply company in Marseilles in 1895, young Pierre Bellon shifted his family's company into food service in 1966, with a single corporate dining room. This was followed by a move into catering services for schools, hospitals and staff restaurants.

    Bill Fishman, the co-founder of ARA Services, which later became Aramark Corporation (another key rival for Sodexho), coaxed Pierre Bellon to visit the US for a few weeks in 1970 as he hoped to buy the Frenchman's company. As a result of the visit, however, Bellon found that he liked the new line of business even more and went on to expand it.10

    Sodexho began its international expansion with a contract for a Brussels hospital in 1971. In 1975, Sodexho broadened its activities to include remote-site management for large onshore and offshore sites, first in Africa, then in the Middle East. In 1978, Sodexho entered the voucher business in Belgium and Germany. Vouchers are a system for employers to pay employees in lieu of a monetary payment. They include meal, childcare and gift vouchers.

    The 1980's saw Sodexho expand further into the Americas and a public floatation in France. The early 1990’s saw further expansion in Japan, Russia and Eastern Europe.

    In 1994 Sodexho acquired an 8% stake in the Nashville-based Corrections Corporation of America (CCA). The USA's first and largest provider of detention and corrections services to governmental agencies.11 In 1995, Sodexho acquired the UK's biggest contract services group, Gardner-Merchant Ltd., and Swedish contract management company Partena, and in 1996, they entered the world's largest service voucher market in Brazil, by acquiring Cardapio.

    In 1997, the parent company changed its name to Sodexho Alliance S.A. In 1998, Sodexho Alliance combined its North American operation with Marriott Management Services to create Sodexho Marriott Services (SMS). SMS was the spun off 'catering and facilities-management' wing of the management company Marriott International, Inc which was itself divided from the hotel-owing company, Host Marriott Corp., in 1993. Just to clarify: Sodexho does not own Marriott hotels.

    At that time, Sodexho Alliance held an approximate 48% stake in SMS, most of the rest being held by the public on the stock exchange. In May 1999, Michel Landel from Sodexho Alliance was unanimously nominated chief executive of SMS and in 2001, Sodexho Alliance bought the remaining shares in SMS and renamed the business, Sodexho, Inc.

    In 1999 Sodexho opened the “Sodexho Research Institute on the Quality of Daily Life”(See later).

    In 2000, Sodexho Alliance and Universal Services merged to become the world’s largest remote-site management company. In 2001, after a major US university campus campaign, Sodexho Alliance sold its 8% share of Correction Corporation of America. However, it has expanded its direct involvement in the industry by acquiring CCA's stocks in U.K. Detention Services and Corrections Corporation of Australia, now renamed Australian Integrated Management Services (AIMS). Previously Sodexho and CCA had run these companies in partnership.

    In 2002, Sodexho Alliance was listed on the New York Stock Exchange.

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    References

    1Sodexho's mission statement. www.sodexho.com/SodexhoAnglais/connaissance/index.cfm?attributes.fuseaction=PHImain

    2www.sodexhoalliance.com/16sxoatny/pdf/RA_2002_us.pdf viewed 1/12/03

    3 www.domain-b.com/management/quality/19990517sodexho.html viewed 07/10/03

    4 www.bloomberg.com/apps/news?pid=10000101&sid=aOwETPbrkMv8&refer=japan report dated 09/07/03 viewed 16/07/03

    5 www.sodexho.co.uk/aboutsodexho/index.asp viewed 07/10/03

    6'Sodexho's involvement in privatisation and PFI' GMB report by the Labour Research Department Jan 2002. www.gmb.org.uk/docs/pdfs/SodexhoPostVictoriaInfirmary.pdf

    7 www.sodexho.com/SodexhoAnglais/informer/index.cfm?attributes.fuseaction=infespmain viewed 07/10/03

    8www.sodexho.com/SodexhoAnglais/connaissance/index.cfm?attributes.fuseaction=CROmain viewed 29/10/03

    9 www.sodexho.com/SodexhoAnglais/connaissance/index.cfm?attributes.fuseaction=CROmain viewed 07/10/03

    10 'Sausages to Sprinklers' Forbes Magazine www.forbes.com/global/2002/0527/024_2.html 5/27/02 viewed 29/10/03

    11www.correctionscorp.org viewed 29/10/03