Elior SA

61-69 rue de Bercy
75589 Paris Cedex 12
France
Telephone: (+33) 1-40-19-47-88
Fax: (+33) 1-40-19-47-12
Web site: http://www.elior.com

Public Company
Incorporated: 1991 as Bercy Management
Employees: 45,072
Sales: EUR 2.07 billion ($2.0 billion) (2001)
Stock Exchanges: Euronext Paris
Ticker Symbol: ELR
NAIC: 722110 Full-Service Restaurants; 722211 Limited-Service Restaurants; 722320 Caterers

Elior SA is one of the top three contract catering groups in Europe—and number one in France and Spain. The company focuses on two primary catering categories: Institutional Catering, which includes service to schools, hospitals, and businesses; and Commercial Catering, including the ownership and management of restaurants along freeways, in railway stations and airports, fast-food restaurants, and in museums and other public facilities, including Paris’s Louvre and the Eiffel Tower. Institutional Catering remains the company’s largest division, with nearly 70 percent of the company’s revenues. The company’s operations are carried out under a variety of brand names, including Eliance, the umbrella name for its commercial catering activities; Avenance, the company’s contract catering brand; British brands Nelson Hind, High Table, and Brian Smith; Spanish brands, including Areas and Serunion; autoroute (freeway) concessions l’Arche in France and Ars in Spain; and franchised and other restaurant brands including Pomme de Pain, Quick, Station Sandwich, TJs, Opus, and Buffalo Grill. The company also owns a number of prestigious restaurants, including the Jules Verne at the Eiffel Tower, Le Drouant, the Le Ciel de Paris at the top of the Montparnasse Tower, the Restaurant du Musée d’Orsay, and Le Grand Louvre. Since consolidating its position in the French market, Elior has been actively expanding its international presence, notably in the United Kingdom and Spain, but also in the Netherlands, Belgium, Luxembourg, and Italy, as well as a presence in the Latin American market. In 2001, international operations accounted for nearly 40 percent of the company’s total revenues of nearly EUR 2.1 billion. Listed on the Euronext Paris stock exchange, Elior is led by Co-Chairmen Francis Markus and Robert Zolade, who founded the company in 1991.

Launching a French Catering Leader in the 1990s

Francis Markus and Robert Zolade began their careers in the collective catering business in the 1970s, working for Jacques Borel International. Both men gained top level positions with Jacques Borel—Marjus became the president of the company’s collective catering subsidiary Générale de Restauration, while Zolade was named general manager of Jacques Borel’s collective catering division.

Jacques Borel had started his business in the mid-1950s with a single restaurant. By the middle of the 1970s, Borel had become the leading restaurant group in Europe, while subsidiary Générale de Restauration had become the leading European collective catering company. Borel also ran a thriving franchise catering operation under insignias including Café Route and L’Arche. The company had also developed the world’s largest luncheon voucher network, issuing more than 165 million vouchers per year through much of Western Europe.

Borel’s attempt to enter the hotel business began in the mid-1970s, notably with the takeover of Sofitel, a chain of some 45 four-star hotels in France and Belgium and elsewhere in Europe. Yet Sofitel ran into trouble toward the end of a decade marked by a long worldwide recession. In 1980, Borel sold the Sofitel group to fast-rising SIEH, the owner of the highly successful mid-priced hotel brand Novotel, and other hotel brands including Ibis and Mercury. Three years later, Novotel SIEH acquired the rest of the Borel group, including its Générale de Restauration subsidiary. The merged group then took on a new name, Accor, becoming one of the world’s largest hotel and restaurant groups.

Both Markus and Zolade remained with Accor, building up its new collective catering and restaurants operation. Accor continued expanding its hotel business, launching the Formula 1 brand in the mid-1980s and moving into the United States at the beginning of the 1990s with the acquisitions of the Motel 6 and Regal Inns hotel groups. By the end of the 1980s, Accor, which had begun preparing the contested takeover of Belgian hotel and tourism group Wagons-Lits, completed in 1991, decided to dismantle its collective catering business.

In 1991, Markus and Zolade left Accor and set up a new company, Bercy Management, for the express purpose of buying up a controlling stake in the Générale de Restauration subsidiary. Together with 300 of the subsidiary’s managers, Markus and Zolade completed the buyout, gaining 35 percent and management control of the business. Accor maintained a 50 percent equity interest in its former subsidiary, while the remaining shares were picked up by investor Générale des Eaux, which was later to form the basis of Vivendi.

Markus and Zolade became co-presidents and co-chairmen of the company, and set out to build Bercy Management into France’s leading collective catering group. Yet from the start, Bercy Management also set its sights beyond France—one of the new company’s first moves was to take a minority shareholding in England’s High Table, a high-end executive dining and catering company based in London.

In 1993, Bercy Management expanded in France, acquiring a stake in catering group Elitair. Another acquisition made that year, of Orly Restauration, gave the company an opening into the airport concessions sector with that company’s Orly airport-based operations. The following year, Bercy Management bought out Accor’s shares in the Générale de Restauration company, raising its stake to 85 percent. The company next turned to the Spanish market, where it launched a new subsidiary targeting the airport catering sector, Elite Aeropuertos. In 1995, the company strengthened its French operations with the acquisition of French-style fast-food chain Pomme de Pain.

Meanwhile, Bercy Management’s relationship with High Table attracted the interest of another London-based catering group, Catering & Allied. Established in 1975, Catering & Allied had grown into an important player in the U.K. collective catering market and had also built up a solid position in the Netherlands. As that company’s founders faced retirement, they turned to Bercy Management. In 1995 the two companies created a 50-50 partnership called Eurocater, which took over Catering & Allied’s Dutch holdings and gave Bercy Management a 27 percent share in Catering & Allied.

Bercy Management continued to develop its international holdings, including stepping up its presence in the United Kingdom through the acquisition of catering group Drummond Thompson in 1996. The company by then had also completed its acquisition of High Table. In France, the company had rapidly built up its position in that country’s institutional catering market. Yet Bercy Management’s operations in the commercial catering side, grouped under its Elitair subsidiary, had lagged behind in growth.

European Catering Leader in the 21st Century

The solution to this problem came in 1997, when one of France’s leading commercial catering groups, Holding de Restauration Concédée (HRC), became available. Unable to finance an acquisition of HRC by itself, Bercy Management turned to capital investment group Advent International, with whom Zolade already had a personal working relationship. Bercy Management and Avent International then created a joint venture, Eliance, held at 51 percent by Bercy Management, which contributed its existing Elitair concessions catering arm. Grouped with the HRC operations, Eliance became France’s leading commercial and concessions catering company.

Meanwhile, Bercy Management moved to gain complete control of its Générale de Restauration holding, buying out both Générale des Eaux and its manager shareholders in 1997. The following year, Bercy Management restructured its holdings, changing its name to Elior and regrouping its activities around two primary cores: Avenance, which became the umbrella for the company’s contract catering operations; and Eliance, its commercial and concessions catering arm. As result of the restructuring, Advent exchanged its 49 percent share in Eliance for a 25 percent share in the new unified Elior. These changes were made in order for Elior to beginning preparing its public offering.

In the meantime, Elior increased its international expansion effort. In 1999, the company took over Midlands, England-based Brian Smith. That acquisition not only doubled Elior’s U.K. presence, but also gave it a 50 percent share of that country’s high-end executive catering market. Soon after that acquisition, Elior completed its partnership with Catering & Allied when Elior stepped up its participation in Eurocater to 80 percent; Eurocater also took over all of Catering & Allied’s U.K. and Netherlands operations, as well as Elior’s Dutch holdings. The acquisitions of Brian Smith and Catering & Allied boosted Elior to the fifth-place position in the U.K. catering market.

Company Perspectives

Strategy: To meet the demands of a constantly changing market, and to strengthen its position as a major player in the European restaurant industry, Elior is deploying an ambitious development strategy articulated around five key objectives: capitalize on our leading position in France to support international growth; promote grow through partnerships with local operators; improve operating margins; increase sales and market share through innovative marketing; build synergies between businesses and geographic regions.

Our values: A commitment to quality, guest satisfaction, vendor loyalty … The success of Elior brands in inventing new dining pleasures over the last ten years is due to the group’s core values. We value: friendliness, creativity, commitment to quality.

In France, Elior acquired full control of autoroute concessions group SRPMC. The company also acquired hospitals and healthcare specialist GHS Exploitation, and Société Hôtelière de l’Aéroport International de Brest, which operated restaurant concessions at the Brest airport. The company then entered Italy, acquiring a minority stake in that country’s Ristochef; the following year, Elior increased its holding in that company to 50 percent. In Spain, meanwhile, the company acquired contract caterer Osesa. That purchase led the company to Latin America the following year, with the purchase of a 51 percent share of Mexican airport catering concessions group Aerocomidas.

Elior went public in April 2000 in order to fuel its continued international expansion. At that time the company acknowledged its interest in entering the U.S. market. In the meantime, the company continued building on its rise to European leadership, acquiring, in June 2000, Scotland’s Nelson Hind. That purchase made Elior the number three contract catering group in the United Kingdom.

The company’s expansion drive continued through 2001, with Elior reaching a strategic alliance with Spanish companies Areas and Serunion, helping to lift Elior to the position of the number one contract catering company in Spain. The company also expanded into new markets, notably Portugal and Morocco. Other acquisitions made by Elior in 2001 included a 38 percent share in France’s Services & Santé, and a 34 percent share in that country’s LRP. The company also completed a new public offering, selling an additional 19 percent of its stock. Following that offering, some 57 percent of Elior’s stock was listed on the market.

By 2002, Elior had transformed itself from a largely France-oriented company into a leading European contract catering firm. Some 40 percent of the company’s revenues were now generated outside of France. Despite difficult market conditions following the attack on the World Trade Center in September 2001, Elior managed to record continued revenue growth, while a tight control on costs enabled it to boast stronger gains in profits. The company was then able to look forward to continued expansion, applying its formula of acquisitions and partnerships to build a collective catering powerhouse.

Principal Subsidiaries

Gourmet Club; HRC; Océane de Restauration; PDP Centres Commerciaux; PDP Drouot; PDP International; PDP Lafayette; PDP les Terrasses; PDP Montparnasse; PDP Paris Centre; PDP Paris Halles; PDP Rive Gauche; Personnal; Pomme de Pain; Resapro; Restaurants et Sites; Resteurop; Rosell; Sogeccir; S2R Ile-de-France; S2R Province; Sagrec; Sahpra; Saresp; SBSO; SC2R; SRB; SSR; Soferest; Sopresthel; Sorebor; Soregis; Sorenolif; Soresco; Sorreg; SPAB; SPAC; SRAB; SRBE; SRNA; STS Alsace; STS Lorraine; Suite et Faim; Académie Elitair; Actair; Ancienne Douane; Aprest; Arpège; Avenance; Avenance Enseignement; Avenance Entreprises; Avenance Santé-Résidences; Avenance Services; Bercy Services I; Bercy Services IV; Buffet Dijon; Buffet Marseille; Buffet Montparnasse; C Bobbia Restauration Moderne; C2L; C3L; Coservices; Cores; Drouant; Drouant Exploitation; EGSR; Eliance; Eliance au Printemps; Eliance Centre Pompidou; Eliance Développement; Eliance Exploitation; Eliance Expo; Eliance Gestion; Eliance Marseille Provence; Eliance Montpellier; Eliance Rail; Eliance Roissy 2F; Eliance Services; Eliance Tolbiac; Eliance Tour Eiffel; Elior Gestion; Elior Services; Eurobar; Expresself; FCF; GSR Ciel de Paris; Avenance Group Catering (U.K.); Catering & Allied (U.K.; 80%); Drummond Thompson (U.K.; 80%); Elior UK; Eurocater (U.K.; 80%); Hallmark (U.K.; 80%); High Table (U.K.; 80%); Renard Services (U.K.; 40%); Avenance Catering Ltd (U.K.); Eliance UK; Nelson Hind Cat. Management Plc (U.K.); Nelson Hind Holdings Ltd (U.K.); Elior Nederland (Netherlands; 80%); Holland Catering Specialisten (HCS) (Netherlands; 80%); Le Grand Bernard (Netherlands; 80%); Restoplan (Netherlands; 80%); Elior Catering BV (Netherlands; 80%); Elite Aeropuertos (Spain); Mediterranea de Restaurantes (Spain); Raesa (Spain; 51%); Recyg (Spain); Grupo Osesa SA (Spain); Osesa Aeropuertos (Spain); Gerelux (Luxembourg); Ristochef EC (Italy; 50%); Elibel (Belgium).

Principal Competitors

Compass Group Plc; Sodexho Alliance SA; Accor, Aramark Corporation,; Autogrill SpA.

Key Dates

1991:

Francis Markus and Robert Zolade found Bercy Management and buy out 35 percent stake in Générale de Restauration from Accor; Bercy acquires minority stake in High Table.

1993:

Company acquires stake in Elitair and Orly Restauration.

1994:

Bercy establishes subsidiary Elite Aeropuertos in Spain.

1995:

Company acquires Pomme de Pain and begins partnership with Catering & Allied.

1997:

Company acquires 100 percent control of Générale de Restauration; in partnership with Advent, company purchases HRC, which is placed under Eliance joint venture.

1998:

Company restructures operations and changes its name to Elior; Advent takes direct stake of 25 percent.

1999:

Elior acquires Brian Smith of the United Kingdom, Osesa in Spain, and Aerocomidas in Mexico.

2000:

Company acquires 50 percent of Ristochef in Italy; goes public on Euronext Paris stock exchange; acquires Scotland-based Nelson Hind.

2001:

Elior concludes strategic partnership agreements with Areas and Serunion, both in Spain.

Further Reading

Bozec, Louise, “Elior Cites Control of UK Margins As International Earnings Soar,” Caterer & Hotelkeeper, June 27, 2002, p. 5.

“Elior Makes Plans for Global Expansion,” Caterer & Hotelkeeper, January 18, 2001.

“Elior Spreads Its Wings Abroad,” Eurofood, December 16, 1999.

“Elior Will Test Markets with EUR 380m Combined Offering,” Euro-week, May 18, 2001, p. 24.

Iskander, Samer, “Elior Expands Its UK Side,” Financial Times, June 14, 2000, p. 29.

—M. L. Cohen