School menu revamp hits Compass

Jamie Oliver's campaign has forced firms to rethink school menus

The world's largest catering firm, Compass, has blamed the so-called Jamie Oliver effect for a drop in profits.

The group - whose brands include Harry Ramsden's and Burger King in the UK - said profits fell to £184m in the six months to March from £203m in 2005.

The UK schools market continued to be its "greatest challenge" as it switched to healthier menus, Compass said.

But an encouraging performance in the US helped lift group turnover by 8% to £5.7bn on a like-for-like basis.

The rise came despite the group facing allegations from the United Nations (UN) allegations of corruption in contract bidding procedures to supply UN forces in Liberia.

In the UK, I'm satisfied we are making progress in implementing the actions necessary to create a solid platform for future growth Andrew Martin, Compass Check shares in Compass

The UN suspended deals with the firm in October amid claims that one of its units may have improperly obtained confidential information concerning a three-year contract to supply food and water to UN peacekeepers in Liberia.

Refocus

In the UK, the firm has been working hard to renegotiate or drop poorly performing contracts after profits for the previous financial year were slashed by a third - and has already quit 50% of its lower margin contracts in the UK.

In April, Compass sold its Upper Crust sandwich business to Moto Travel concessions in a £1.82bn ($3.2bn) deal.

"In the UK, I'm satisfied we are making progress in implementing the actions necessary to create a solid platform for future growth," said Andrew Martin, group finance director.

However, it has been battling against a background of healthier eating promotions prompted by TV shows, in particular Jamie's School Dinners.

In the Channel 4 show, celebrity chef Jamie Oliver launched a campaign for better food for schoolchildren which led to schools banning some junk foods, such as turkey twizzlers.

As well as its focus on healthy eating in schools, Compass is also developing a range of "Steamplicity" products - which allows high quality fresh foods to be prepared off-site and served on site without the need of a traditional oven.

Despite the drop in profits, shares in the group rose six pence, or 2.6%, to 240.5p by the close.