The Financial Times have been made privy to a report produced by the Hotel Employees & Restaurant Employees Union that accuses Compass of mismanaging its finances.
In a report produced as part of its ongoing battle with the company over wages and conditions, the union specifically accuses Compass of cash flow problems, increasing debt, a change in strategic direction and driving down margins through a destructive quest for market share.
The report cited research by investment banks, which it claimed showed that Compass’s debt stood at £3 billion. It also cited a greater dependence on the North American market by Compass, which it thought harmful as margins there were lower than in Europe.
Compass chief executive, Michael Bailey, responded by pointing out that the company employs 365,000 staff in 96 countries while this dispute involves only nine union contracts affecting around 500 people.
He also stated that Compass had not had a strike in North America since its arrival there nine years ago. Moreover, he specifically denied the charge of financial mismanagement.
Compass, the world’s biggest catering group, had to watch as the stock market failed to respond to the upbeat interim figures it produced two Tuesdays ago. The share price fell 10% to its lowest showing since Compass demerged from Granada at the beginning of last year.