Elior India, a food catering and support services provider, is in talks with three companies for a buyout as it plans to expand the firm’s footprint by building centralised kitchens and pare costs using technology.
“A third of the $100 million we talked about bringing to India will go for acquisitions,” said Sanjay Kumar, chief executive officer, Elior India, a fully-owned subsidiary of France’s Elior Group, said in an interview.
“There will be two sectors which will be of interest to us. One is corporate, and the second is education and healthcare. These will be the top priorities.”
Elior India is aiming to topple competitors such as Sodexo and Compass Group in India. The Indian food industry is valued at about $40 billion and is growing at a CAGR of 11 per cent. It is slated to reach $78 billion by 2018. The Indian contract catering market is worth $3.3 billion and is growing at 16 per cent.
The food service industry is slated to reach $78 billion by 2018 and the contract catering market in India is valued at $3.3 billion or 23 per cent of the market opportunity. It is growing at a CAGR of 16 per cent. The market is fragmented with more than two million organised caterers.
“We are talking to three players in the industry space, who undertake banquets as well. We do not want to acquire for the sake of scale and it should fit in with our premium food service provider position,” Mr. Kumar said. “Most people whom we talk to are in the business for more than a decade. Otherwise, the confidence level that the customer has on their services is very low.”
“The banquet segment is a huge one,” he said. “There is a large space outside of it which includes conferences, company events like employee day, family day, each of which brings in sometimes 3,000 to 5,000 employees to have food together.
“Then there is healthcare segment. That is very large that involves a very complex delivery system including patient food, attendant food, visitor food, doctor food, staff food and within the patient food also you have multiple categories.”
Elior is present in the education segment. It caters to different universities and hostels. “As of now there are multiple segments which do not exist in India, for example, the defence, the railway,” Mr. Kumar said.
“In healthcare, we are looking for a target to acquire as we do not have the competency. In educational institutions, we are already there with Indian Institute of Technology, Canadian International School and others. We will be gradually expanding in this segment,” he said. “All the target companies are in central and northern India.”
Elior entered India in late 2016 through two acquisitions — a majority stake of 70 per cent in Chennai-based CRCL and 100 per cent stake in Bengaluru-based Megabite Food Services. Put together both the companies serve 129,800 meals every day. Post-acquisition, Elior customers include Daimler, Pfizer, Cisco, Google, MRF, Vellore Institute of Technology, Larsen & Toubro, Ashok Leyland, Panasonic and Hindustan Motors.
In Bengaluru, the firm is setting up one of India’s most “expensive centralised kitchen.” “It will be a greenfield project to be set up at a cost of about Rs. 30 crore. We expect to commission it in the first quarter of 2019.”
The kitchen will have about 200 people working in three shifts. Elior is also planning to expand its centralised facility in Chennai.
“Technology can make a huge difference,” Mr. Kumar said. “Globally you have tools where you can map from the invoice you have generated at the counter, the consumption trends. We will install an ERP called the Time Chef. It links your entire ERP with consumption. All of this goes into cutting down on waste.”
Elior India aims to grow at 16 per cent CAGR over the next three years.
“The biggest player in the Indian market is not even worth 200 million in a $3 billion market. No other industry is so fragmented that with 2 per cent of the revenues you become the market leader,” Mr. Kumar said. “
“Our aspiration is to be the number two player by next year,” he said.
