Compass Group PLC, the U.K. foodservice provider whose holdings include Compass Group USA and Canteen Vending, reported some progress against the COVID-19 losses in the third quarter as customer locations began to reopen. The company's revenues in the quarter ending June 30 fell 44%, with losses in Europe heaviest at 54% while North America was down 45% and the rest of the world was down 20%.

The company noted that compared to an earlier stated recovery scenario of being down 50%, the current scenario indicates some improvement over prior expectations.

"What we've seen typically is faster reopening of the industry sector, and higher volumes," Dominic Blakemore, group chief executive, said in an investors call. "And I think those are for the obvious reasons that typically need people need to be onsite to produce and manufacture, and that has been our sort of consistent experience around the globe."

As for the 60% of the critical B&I sector that is business, he said, "Clients across all sectors are being, I think, very cautious and careful about the pace at which they bring staff back, especially with regard to their obligations around health and safety for those individuals, and especially with the uncertainty that we see around further spikes more generally."

"We're starting to see a small number of sites reopening, and we're also working with our clients to pass through higher operating costs," he said. "However, a greater weighting towards business and industry, stricter containment measures and a less flexible workforce mean that while we are vigorously managing the situation, progress in the region will inevitably be slower."

Accounts in the business and industry sector, which accounts for 38% of the company's business, were mostly closed in April and May, and started to reopen in June.

By the end of June, about 60% of the company's business accounts were open, compared to 55% by the end of May.

Due to the different containment measures at the state level in the U.S., the company's operations in North America were slightly more open than in Europe, the company noted.

As the sites reopen, the company has held conversations with clients to recover the higher costs of operating with enhanced health and safety protocols and lower participation rates. This, combined with more flexible labor laws, has allowed Compass to adjust its cost structure and start to rebuild the operating margin.

Accounts were also mostly closed in the education sector, which accounts for 20% of the company's business.

September will be an important month, said Karen Witts, chief financial officer.

"We will need to see what happens when the schools and the higher education institutions go back and, indeed, what the student behaviors are like once they go back to their schools and universities," Witts said during the call. "And then we also need to see the pace of returning to work in the B&I sector."

The healthcare sector, which accounts for 24% of the company's business, was good.

Sports and leisure, 11% of the business, remained fully shut.

In Europe, the lockdown measures have been deeper and more widespread than in other regions. Stricter containment measures and a less flexible work force mean progress in the region will be slower.

In rest of the world, most of the business was open at the end of June.

The pace at which volumes will recover remains unclear, however, especially given a possible increase in local lockdowns, the company noted.

In the third quarter, the company spent 42 million ($54.76 million) in resizing costs, mainly in North and South America, Blakemore said.

He cited the company's 95% account retention rate as a key win in the quarter, as it is slightly above its long-term retention rate.

In North America, he said he expects the company will have its best year ever for new business.

Blakemore also mentioned the possibility of Compass becoming active in the food delivery space, a rapidly growing segment of the foodservice industry. He noted the company has kitchens that can be used to prepare delivery orders.

"There's no reason they can't be used for batch production of high-quality meal offerings," Blakemore said. "So I think we have the assets, and I think we're also figuring out that, in the new world post COVID, you know, the assets that we share with our clients can be more fully used and utilized when they're not being utilized with our clients."

For an update on how the coronavirus pandemic is affecting convenience services, click here.

Read the rest here:

Compass Group report slow progress in COVID-19 recovery for Q3 - Vending Times