Description of Principal Risk Factors
The tables describing Sodexo’s principal risk factors (see below) give an estimate of their timeframe (short-term, medium-term or long-term), their possible impact and examples of measures implemented to reduce these risks.
The risk timeframe is shown as follows:
- - Short-term (less than a year)
- - Medium-term (1 to 3 years)
- - Long-term (over 3 years)
CLIENT RETENTION
Risk of not keeping and renewing contracts with Sodexo’s existing clients.
Risk Timeframe: Medium-term
Category: Client & Consumer Centric
Impact
Client needs have significantly changed over the course of the Covid-19 pandemic. Many clients are allowing their employees to return to the workplace on a hybrid model, working both at home and in the office on a regular basis. This means that Sodexo's food offer has to be more flexible to be able to reach consumers in both places and that the traditional workplace food offering an on-site kitchen providing food to on-site employees at set hours is evolving.
Sodexo needs to work with its clients pro-actively as a partner to adapt to changing circumstances and continue to meet evolving client needs.
A lack of ability to adapt to the client’s current circumstances, an inability to transform our services to remain attractive to meet client/ consumer demand, or any changes in client outsourcing strategy could mean that the client is not retained, possibly leading to:
- less growth;
- decrease in profitability;
- loss of credibility in the market place.
Examples of Mitigating Activities
- On-site teams continually listening to the client and the consumer.
- Strengthening of the client relationship management process to ensure alignment with client expectations on an on-going basis.
- Rise with Sodexo, a combined On-site Services and Benefits & Rewards Services global program dedicated to the re-opening of client offices and sites, and any changes in their daily operations.
- Ability to offer new services to respond to client challenges (disinfection cleaning, digital retail, virtual concierge).
- Client relationship management tool to track and monitor retention related activity.
- Risk reviews carried out with key accounts every six months to review retention risks.
- Monitoring at global level of retention in the client portfolio.
CONSUMER EXPECTATIONS
Increasing consumer expectations around personalized and innovative services, healthy food choices and a comfortable environment; increasing consumer expectations in relation to Company business conduct and environmental impact.
Risk Timeframe: Short/Medium-term
Category: Client & Consumer Centric
Impact
“Empowered consumers” is one of 11 megatrends that Sodexo has identified in its markets. Consumers are increasingly voicing their opinions and clients are taking their opinions into account. Moreover the Covid-19 pandemic has accelerated both the empowerment trend and new consumer behaviors. Consumers expect to be able to consume food in different ways and at a time of their choosing. They expect more choice, more convenience, healthier options and socially responsible behavior from the companies from which they receive service. Specific examples that Sodexo has had to take into account include:
- increased use of digital platforms for delivery of meals;
- rise of demand from our consumers for plant-based food that is less carbon intensive;
- reduction of single use plastics to reduce marine pollution.
If Sodexo cannot adapt its consumer offer or cannot anticipate and meet consumer expectations for innovation and in relation to environmental impact or business conduct, its revenues, as well as its reputation, could be affected.
Examples of Mitigating Activities
- Digitally enabled food services with apps that offer mobile ordering, cashless services, rewards programs and digital management of meal benefits (e.g. Bite+, Zeta in India).
- Partnership with meal delivery platforms including Uber Eats and Deliveroo.
- Roll-out of 10 Golden rules of nutrition, health and well-being.
- Sodexo employs more than 5,400 dieticians worldwide.
- Mindful by Sodexo menus that concentrate on ingredient transparency and high quality nutrition.
- Removal of key single use plastic food service items at all sites in Europe: takeaway bags, straws, plates, cutlery and stirrers.
- Sodexo’s Code of conduct, the “Business Integrity Guide” sets out Sodexo’s standards for business integrity.
- Global Ethics & Compliance Committee supports programs throughout the Company.