Recovery or not, 2010 was a tense year for everyone. The penny-pinching set off by the recession affected suppliers to big companies as well. And yet for the catering company DSR, the year was one of its best on record. It may have to do with CEO Andrew Gordon, the man responsible for the future of this company born almost a century ago with a very different mission. Swiss Style’s roving reporter Lauriane Zonco went to find out what were the magic spices in DSR’s business recipe.
You might not have heard of Andrew Gordon, but there is a good chance you have been his guest over the past few years, whether you have had a drink while wandering in the Palexpo halls, grabbed a bite at MacSorley, the Geneva Hockey Club restaurant, right before a nocturnal hockey game, visited a client or relation for lunch in the hushed salons of some of Geneva’s most prestigious companies, or had a meal on one of Lake Geneva’s steam boats. What’s more, this man, whose name seems unknown to you, might also be feeding your kids on a daily basis. Everything Andrew Gordon does revolves around that essential element of our lives, food.
As the CEO of DSR, one of the main companies active in the field of mass catering in Switzerland, and the predominant one in the French speaking part of the country, Andrew Gordon has overseen the production of more than 12 million meals all over the territory in 2010 alone. So while you might not know who Andrew Gordon is, there is a good chance he knows how you like your meat cooked. He is also an effective CEO, who leads a successful enterprise and manages to get picked up as a regular interviewee in most of French-speaking Switzerland’s publications, from the Agefi to Le Matin. DSR, as few now still remember it, stands for Département Social Romand, or Department of Social Affairs of Romandie. It was initially set up as a not-for-profit foundation in 1919 to cater for Swiss soldiers by offering them food and a warm place to meet. Over time, the DSR mandate evolved to cater for large Swiss public entities such as the Swiss Railways and the Post Office. The foundation kept on in the field of corporate catering with a not-for-profit mindset, de facto becoming the sole operator in the field in Switzerland’s French speaking regions.
Entrance of the gladiators
It all changed in 1978 when capitalism swept into the country’s mass catering scene in the form of EUREST, a joint venture between Nestlé and Carlson Wagon Lits and one that had the clear objective of conquering the market in Switzerland and Europe – while making good profits along the way. The new kid on the block forced all existing players, including DSR, to rethink the way they operated. The company decided to go for-profit in 1978. But, as Gordon puts it, it was above all an effort to become “more business-oriented, more professional” rather than a mercantile decision. “We remain a foundation at heart, but we operate in the same way any other business operates with regards to human resources, managerial organisation or productivity goals; what sets us apart is that we still have this vision for quality at the core of our company.”
Gordon’s business model is, in essence, quite straightforward: quality service at a reasonable price produces loyal customers and increased profits. It may sound like wishful thinking but DSR’s figures make a good job at dispelling any doubts: 2010 was a record year for the company, with a turnover of CHF 263 million, well above the CHF 240 million objective Gordon had set according to his interview with Le Temps last year. It represents an 11.7% increase from the 2009 figures. “This is an extremely encouraging result,” enthuses Gordon, “it a true reward for the managerial efforts of the DSR team.” All the subsidiaries of the group – ten in total – performed better in 2010 than in 2009, and all display positive financial results for 2010. These figures are not simply the result of some random lucky streak: 2010 was also a year that saw DSR invest massively in its own group, from brand new headquarters in Rolle (VD), to re-designed collective restaurants. The idea is to ensure a sound foundation for years to come. The investments naturally mean increased amortisation costs, which reached record level in 2010. Nevertheless, DSR also managed profits of CHF 3.7 million in the same year, which translates as 12.2 million meals – an increase of some 700,000 meals – in its 240 restaurants spread all over Switzerland; it created 173 new jobs, mostly in the Canton of Geneva, bringing the group workforce to 1706 employees. And finally, true to its founding spirit, DSR managed to redistribute 20% of its profits to charities.
The tale of the expanding group that manages to hire, enjoy growing profits, and give back to the community seems almost too good to be true in these times of economic hardship. The usual approach to surviving in hard times – and increasing profits in good times – is to skimp on quality and good corporate behaviour, reduce wages, fire staff, browbeat suppliers and create a cloud of euphemisms to hide what’s going on. This is not the Andrew Gordon approach: “The board is still very much at heart a not-for-profit organisation type of board, and they were concerned that these good figures were the results of some kind of hardcore business methods.” A board that does not go by the rule “the end justifies the means” sounds intriguing, almost unorthodox. Actually, speaking with Andrew Gordon, one comes to realise that this success is rooted in a healthy corporate mindset, coupled with an acute understanding of the market they operate within.
Andrew Gordon is above all a sharp manager who has mastered the specificities of his field and of the country he is based in. “Switzerland is the country in Europe, if not the world, with the highest standards of quality in catering services. Like many things in Switzerland, the quality of food and service is really valued and appreciated.” He remarked long ago that in Switzerland “providing a quality meal at lunch in nice surroundings is seen as an asset for the company, be it from a reputation standpoint or as motivation for the employees. Here, people still want to give the best to their employees, which is a very different picture than in the rest of Europe where the battle centres around cost at the detriment of quality”. And DSR has clearly used this Swiss particularity to the company’s advantage: “I think that in Switzerland people are ready to pay a little bit more for top quality products and service,” Gordon explains, “so what we offer is high quality and the freedom for a company to design its own catering solution according to its needs”.
This tailor-made offering contrasts sharply with the standardised solutions practiced all around Europe in the mass catering business, but in Switzerland, this proves to actually be a winning formula. “Companies come to us because we provide them with custom- made catering solutions that may seem a little bit more expensive at first, but provide good return on investment quite rapidly.” This is such a specificity of the Swiss market that Andrew Gordon has seen quite a few “big global catering companies” come to prospect in the country and leave rapidly once they had realised the quality standards of the local market. Meanwhile, DSR and Andrew Gordon have stuck to this mantra in good and bad times, and the company is now enjoying a high-quality image that is gaining new corporate clients on a regular basis: last year’s success is largely due to multiple new collective catering contracts.
On growth course
If high quality and customisation is the motto of the company, a resolute expansion strategy has also helped DSR remain one of the most important players in the field in Switzerland. It started soon after Andrew Gordon became CEO. DSR became a holding in 2002 numbering five subsidiaries. Now it numbers ten, each addition representing a new territory for DSR to conquer, from fine cuisine service to exhibition halls catering, usually with great success. While expanding its portfolio of services, the company also moved into German-speaking Switzerland, more specifically Zurich, an area untouched before for this historically very romande entity.
Gordon has been in a privileged position to observe the very real differences that exist between the French and German speaking parts of the country. “The Swiss Germans are less concerned with the food, and in that sense they are easier to feed,” he points out with a congenial smile, “especially since DSR benefits from a kind of French gastronomy aura. On the other hand, they are much more attuned to their surroundings and the environment they eat in – the light, the furniture, the atmosphere are decisive for them”. The move became another feather in a well-furnished cap. DSR captured the all-important Credit Suisse and UBS contracts in Zurich, which means that DSR is now truly acknowledged as a national player. And as any good corporation, DSR has also worked on its costs, negotiating a fixed price for a range of 1500 basic food commodities with its suppliers in exchange of a guaranteed long-term business relationship.
Andrew Gordon likes his business the way some might like a gourmet meal, enjoying the dish on the table and by the same token having appetising visions of the next course and the next, and the next. He has the knack to sustain the company in the face of competitive wannabes. His focus has been on finding the right interlocutors in Switzerland, companies where serving up good food to employees is considered good corporate behaviour, and where fine cuisine enjoyed within the plush surroundings of the private salons of some well-known Swiss corporations is a strategic element in key client management. There is serious money in titillating the palate. Nestlé shelled out a cool CHF 30 million to come up with a new “wellness” and eating area at its Vevey headquarters. So what is the asset? “Our job is emotions,” says Gordon, “because everybody has an idea of what good food is or should be.”
Food and service quality are obviously paramount considerations. Companies are not averse to hunting chefs in well-known local restaurants. Other factors play a role as well: some companies have offices located outside city centres attracting more employees to any near-by restaurants for lack of alternative offers. This problem affects Geneva in particular, where finding office space within the town centre is becoming near impossible. Businesses therefore seek space on the fringe of the city where there is often zero solution for employees to eat outside.
Economic crises also play a significant role, since company restaurants are almost guaranteed to be a cheaper alternative to eating outside the office. Finally, as Gordon points out, the weather also comes into play, with sunny days seeing more employees eating outside their company premises. The challenge is therefore to make sure eating at the corporate restaurant becomes more than a choice by default, but rather is seen as a real advantage by the employees. If the quality of the food plays a key role here, turning a corporate restaurant into a strategic element requires some real thinking whatever the size of the company.
This is an aspect that DSR has turned into an opportunity. An in-house engineering department was created to design the layout of a corporate restaurant. A fine illustration of this is the impressive Merck Serono eating area in Geneva, where DSR is not only responsible for the catering but also participated in the design of the restaurant. This “engineering” feature nicely complements the tailor-made approach put forward by DSR, enabling them to keep longterm clients while attracting new ones. A few years ago, DSR came up with the “Flexi Self” concept aimed at small and medium businesses that have neither the means nor the space to come up with something as grand as the Merck Serono meeting place but still want to offer their employees healthy and good food within a very simple structure. It gained DSR new clients instantaneously, the Loterie Romande among them.
The next course
As banal as it might sound, the focus on high quality, service-oriented and personalised approach, and a dose of creativity are the ingredients in DSR’s success. What remains to be seen now is if – and how – the company can maintain this fine balance within the context of an aggressive market. The land of mass catering is not a picnic. Until now, the Swiss market has been spared the less than civilised battles waged in the rest of Europe between global mass catering corporations. But Switzerland is a geographically extremely limited market that can only accommodate so many players. It’s a matter of time before they start devouring – or absorbing – each other. Another looming reef could be the assault by corporate bean-counters on the “high prices for high quality”. By Andrew Gordon’s own admission, the “market is getting very tight, and each call for tenders brings out lots of players.” This could, in the medium term, result in a full-fledged price war. It is already forcing margins down, and Andrew Gordon acknowledges that “this is a business in which you earn little when things are good, but you lose a lot when things go bad”. The inherent limits of the Swiss market means that the major catering companies, among them DSR, carefully observe their competitors’ every move to make sure they do not miss out on any new potential client. An encouraging feature of Switzerland and in particular of the Geneva region is that it does welcome new companies on a regular basis – and, more crucially, their existing clients are not tempted to try out another catering company.
And so, with bold moves, the business struggle continues. DSR’s move into German-speaking Switzerland might have been the right one strategically, but it did raise eyebrows among its competitors, especially the ones that considered the region as their prerogative. SV, the Swiss leader in the catering field and the predominant force in the German-speaking area, retaliated by launching services in the French-speaking regions of the country. And then there are the newcomers backed by heavy money: Migros, the historical Swiss corporation, made a big entrance on the mass catering scene when it secured the FC Lucerne contract with its considerable 17,000 stadium seats. The other catering companies might for now officially consider Migros as an outsider that still has to prove itself, but the “orange giant” benefits from a huge purchasing power that might affect the way other catering companies operate.
Andrew Gordon is well aware of the battles that lie ahead and is ready to put his invention cap back on. “We are going to keep expanding at the fringe of the catering business, in order to become less dependent on corporate catering contracts.”
He has already clearly devoted some thinking to it, mentioning the possibility of renting catering equipment, expanding the temporary staff agency DSR has launched recently, developing a professional cleaning business, and, more crucially, expanding abroad, thus de facto circumventing the small market issue. “Cooking needs a clear head, a generous spirit and a big heart,” the DSR website quotes Marcel Proust. It looks like Andrew Gordon is doing business the exact same way. His next venture will take place on the ski slopes of Villars, as DSR prepares itself to launch a joint venture with the Villars ski lifts company to cater for ski slopes restaurants, an interesting move for DSR which has a seasonal workforce on hand from its Lake Geneva venture, that becomes under-employed comes winter. “It makes perfect business sense,” smiles Andrew Gordon.
Swiss catering: the figures
The Swiss catering business is rather hushhush, with only very few of the players willing to share their yearly figures. In fact, only the major companies do so, having joined forces under the umbrella of the “Swiss Catering Association,” mainly as a way to speak with one voice in negotiations with the Swiss government regarding hospitality or food quality standards and national laws.
The association is a grouping of the country catering giants: DSR, Compass Group, SV Group and ZVF.
They are giants, however, only by Switzerland’s standards: between the four, they have a collective workforce of 10,000 and generate sales revenues of close to CHF 1 billion, whereas Compass Europe’s revenue reached almost CHF 5 billion in 2010.