The workplace catering sector hasn’t simply returned to pre-Covid norms – it’s settled into a new operating reality. And one of the most significant shifts sits in how risk is now shared between clients and contract caterers.
During Covid, as workplace volumes collapsed, many organisations moved to cost-plus contracting models. This made sense at the time. It protected continuity of service and reduced financial exposure in an unpredictable environment.
Under these arrangements, contractors typically operate the service at cost and charge a management fee. Any increases in labour, food, or operational costs are passed directly to the client. As a result, the contractor carries significantly less financial risk – and arguably has less ‘skin in the game’ when it comes to commercial performance. Regardless of how catering sales perform, they still get their management fee.
Several years on, a growing number of Facilities Managers, Heads of Estates, Property Managers -and others responsible for workplace catering performance – are now asking a difficult question: Does this model still work for us?
From shared risk to cost transparency
Cost-plus contracts were designed to stabilise a volatile market. But in practice, they can weaken the link between performance, efficiency, and financial outcome.
Clients increasingly report a sense that while cost transparency has improved, accountability for driving value and participation has become less direct. Contractors, meanwhile, argue that they are delivering within constraints they do not control – particularly fluctuating office attendance.
Has de-risking gone too far?
The shift away from profit-and-loss models removed volatility, but also removed incentives that previously encouraged commercial drive and innovation.
It raises a key question: Should contractors share more meaningfully in both the risk and reward of performance?
Pre-Covid models weren’t perfect. They sometimes drove overly aggressive cost control and underinvestment in experience. But cost-plus models can risk swinging too far in the opposite direction – where financial exposure sits almost entirely with the client.
A changing workplace context
This debate is more complex because the workplace itself has changed. In a hybrid working world, a strong food offer can help drive attendance and improve the office experience. But contractors cannot control wider factors such as attendance policies or commuting patterns.
This makes pure revenue-based risk-sharing more difficult – and reinforces the need for a more nuanced approach.
What does ‘good’ look like now?
At Litmus, we see the strongest arrangements not as purely cost-plus or profit-and-loss, but as genuine partnerships with aligned incentives.
As Mack Allan, Consultant here at Litmus who specialises in the B&I sector, explains: “The best outcomes come when both parties are aligned on what success looks like, and how it is achieved. It’s not about one side carrying all the risk, it’s about shared accountability and shared reward.”
Rather than reverting to older models, the opportunity now is to rebalance. This could include performance-linked fees, shared efficiency targets or clear service and quality benchmarks.
If workplace catering is expected to influence attendance, experience, and culture, then the way risk and reward is shared needs to reflect that role. The debate around ‘skin in the game’ is really a debate about fairness, alignment, and what effective partnership looks like today.
If you want to ensure your workplace catering contract model is fit for today’s post-Covid environment, get in touch with us here to explore how a more balanced, effective partnership could work for your organisation. As part of that conversation, we can also share benchmarking insights across peer groups to help you understand how your current approach compares, and where there may be opportunities to improve performance and alignment.
The Litmus team
