Interview with Philippe Guillemot, Chief Executive Officer

Working together to achieve our objectives

How do you feel after a year at the helm of Elior Group?

I feel more motivated than ever. With each day that passes – and particularly when I’m with our frontline teams – my confidence in the Group’s incredible potential gets even greater. Our business is being driven by highly enthusiastic teams who are dedicated to their work and carry out their jobs with a real sense of purpose.

In June 2018 you presented the Elior Group 2021 Plan. What are its objectives?

Philippe Guillemot

From a financial perspective, there are three main objectives for the period from 2019 through 2021: achieve organic growth of more than 3% a year on average, attain adjusted EBITA growth that is twice as high as organic revenue growth and generate €750 million in aggregate operating cash flow. Growth for these three indicators is not expected to be linear.

The plan also has three key objectives in terms of operations. First, to get the Group back on track financially and ensure the expansion of our three businesses while being rigorous in the allocation of resources. Second, to put in place efficient organizational structures by building high-performing teams packed with talent. And third, to futureproof by investing today to capitalize on our growth drivers tomorrow.

What are those growth drivers?

There are three of them, and we are already actioning development and innovation plans for each one. The first is the fact that eating times in contract catering are now much more fragmented. Lunch breaks are getting shorter and guests want to be able to have access to food and drink at any time of the day. We are drawing inspiration from commercial catering to meet these new needs.

Our second growth driver stems from small and medium enterprises (SMEs), many of which realize that having a high-quality catering offering is an effective way to attract and retain the best talent. We can help them meet this challenge by offering flexible concepts with no need for an on-site kitchen, thanks to our network of central kitchens which is the largest in Europe.

And thirdly, longer life expectancy is offering new opportunities for catering, and not only in the care home sector. Seniors are remaining autonomous for longer, and our meal delivery services in Europe and the United States help people to age well. Once again, our central kitchens give us an advantage in this sector, which we intend to leverage while at the same time diversifying the types of personal services we offer.

You often talk about the Group’s central kitchens. Why are they so important?

Our central kitchens form a tight-knit network covering extensive ground in the countries where we operate. They can cook hundreds of thousands of meals each day that meet all of our guests’ nutritional requirements. The meals are prepared according to exemplary safety standards and are offered at a reasonable cost, while being a far cry from industrial food. We will continue to invest in these kitchens to make them a powerful asset both for the markets we currently serve and those we would like to serve in the future.

You say that CSR is at the heart of how your business is run. Can you explain that a bit more?

Philippe Guillemot

CSR is fundamental for us at Elior Group, in the literal sense of the term. Our corporate mission is to feed and take care of people, which places us at the center of many of the challenges of today’s society. This means that what we do is inextricably linked to corporate social responsibility, right up to the very heart of our business model. Our vocation is to provide healthy food to a wide range of people of all ages, from children in nurseries to seniors in care homes. What’s more, think of the contribution we’re making to transforming the food industry by using local suppliers for our restaurants (9,600 in France for example). And that’s without taking into account the fact that we provide jobs to people who have no qualifications and give them the chance of following a real career path. Far from being a constraint, we view CSR as an opportunity for the Group. It is part of what we are and what we want to become: a responsible player in people’s everyday lives.

You also say that innovation is in the Group’s DNA. What does that mean in practice?

Just like CSR, innovation is an essential component of Elior Group’s corporate mission. Our innovation drive covers not only cooking and technology but also our services. We need to identify good ideas across the globe and then turn them into formal projects, share them and roll them out as widely as possible. Our approach is not to centralize the ideas we come up with but to pool them, and I have appointed someone in my team to specifically manage this.

Your executive team is now complete. What do you expect from its members?

Because the Group’s financial success goes hand in hand with the efficient running of our operations, I have strengthened the Group’s organizational structure to ensure that the Elior Group 2021 plan is effectively executed and that our corporate mission is embodied in our everyday work. For instance, I have restored the position of Chief Human Resources Officer, and one of the main responsibilities of this post is to build on our approach of making human resources a vector for social integration. Similarly, I have created a Group Supply Chain Department to encourage the use of short supply chains, list more local products and guarantee that we meet our nutritional commitments. The executive team has clear roles and responsibilities and it is now up to us to work together and with our operating entities to achieve our objectives.

Are these objectives the result of a collective thinking process?

The Elior Group 2021 plan is the result of close interaction with the Group’s entities, which were encouraged to input their ideas. Consequently, our teams know exactly what they have signed up to and what resources they will have to deliver on their commitments. The roadmaps obviously vary from one entity to another but they will all contribute to achieving our ultimate goals. I expect our managers at all levels of the Group to steer to success everyone who works in our 25,600 points of sale worldwide. Because our aim is for each and every operational team to be successful.

What are Elior's prospects in the contract catering market?

In the countries where we are already the leading contract caterer – i.e. France, Spain and Italy – we intend to consolidate our positions, while at the same time exploring avenues of future growth. In the countries where we are a challenger – the United Kingdom, the United States and India – our strategy is to offer services that clearly stand out from the competition. This approach has already enabled us to grow twice as quickly as our markets in those countries. In 2017-2018, the USA confirmed its position as the Group’s second-largest revenue contributor in the contract catering business. We intend to go all out to make it the number one contributor by 2021, through both organic and acquisition-led growth.

How will the services business contribute to the Group's expansion?

Elior Services is the market leader in France and, going forward, we will pursue our innovation strategy in order to reinforce our offering of high value-added services. In the healthcare market, we are leveraging synergies between our services and catering offerings, underscoring the Group’s strength and putting into action our corporate mission of feeding and taking care of everyone.

What is the roadmap for Areas in the concession catering business?

We have invested heavily in Areas over the past few years so our priority is to ensure that we get a return on that investment. We want to deepen our expertise in concession catering so that we can continue to grow the business. Our strategy is aimed at retaining our current contracts and enhancing their performance, as well as selectively winning new contracts worldwide, particularly in the USA.

On November 12, 2018, you announced the launch of a review into the strategic options for the concession catering business. Why?

Today we have more opportunities than we can actually seize across all of our operations. In order to give each of our businesses the resources they require to expand in line with the Elior Group 2021 plan, we now need to make some choices. Were we to take the decision to spin off our concession catering arm, it would be with the aim of helping each business grow by ensuring they have the requisite financial means.