Universal Registration Document - Fiscal 2024

Introduction

Description of Principal Risk Factors

The tables below describe Sodexo’s principal risk factors, their possible impact and give examples of measures implemented to reduce these risks.

CLIENT RETENTION Risk Level: High
Risk of not keeping and renewing contracts with Sodexo’s existing clients.
Category : Clients/Consumers
CLIENT RETENTION

Impact

In order for Sodexo to continue to add value to its clients, and in turn consumers, there is a consistent need to understand - and then meet- their expectations.

In a still rapidly evolving workplace environment, the need for innovation and improvement means that Sodexo must constantly evolve and enhance the ways it supports its clients.

A lack of ability to adapt to the client’s circumstances or offer quality, innovative services could mean that the client no longer values Sodexo as a partner they want to grow and expand with, leading to:

  • disconnection between our goals and those of our clients;
  • decrease in satisfaction from clients and consumers;
  • direct impact on both revenue and profit at account, region and group level;
  • loss of credibility in the market place.
 Risk Level: High

Examples of Mitigating Activities

  • On-site teams continually listening to the client and the consumer; aggregated insights are then fed into operational, functional and strategic teams.
  • Strengthening of the client relationship management process to ensure alignment of the expectations of the client and the Sodexo team on an on-going basis.
  • Deployment of strong branded offers such as Modern Recipe and Kitchen Works to offer clients and consumers new food experiences.
  • Broadening of the multi-channel food offer through targeted acquisitions.
  • Risk reviews carried out on key accounts every six months to review retention risks, with plans in place to mitigate and remove identified obstacles.
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CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS Risk Level: Medium
Increased consumer expectations around personalized, innovative and digital services, and healthy food choices. Increased consumer expectations in relation to business conduct and environmental impact. Structural changes in the way consumers choose to consume food.
Category : Clients/Consumers
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS

Impact

Consumers expect a personalized meal experience. They want to be able to consume food in different ways and at a time of their choosing. They expect more choice, more convenience, healthier options, all combined with the benefits of technology to make a smoother and more seamless dining experience.

Over and above that, consumers also want to spend their money with companies that engage in socially responsible behavior.

If Sodexo cannot adapt its consumer offer adequately or cannot anticipate and meet consumer expectations for innovation, personalization and in relation to environmental impact or business conduct, its revenues, as well as its reputation, could be affected.

 Risk Level: Medium

Examples of Mitigating Activities

  • Acceleration of the implementation of a multi-channel delivery model which offer consumers greater flexibility for food consumption: click and collect, delivery, micro-markets, vending.
  • Increased use of technology, for example robotic food delivery on- campus, 24/7 automated kiosks, digital apps for ordering and delivery, scan and go technology.
  • Focus on expanding the provision of plant-based meals, offering consumers both a healthy option and one with a lower carbon footprint.
  • Supplier Inclusion program that proactively focuses on buying from small and medium-sized companies, suppliers owned or operated by women or people from minority groups and major suppliers who actively embrace diversity, equity and inclusion in their workforce.
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BIDDING RISKS Risk Level: Medium
Risks relating to the commercial and contractual model and the scope of services included in a client contract.
Category : Clients/Consumers
BIDDING RISKS

Impact

Some of Sodexo’s client contracts are long-term and may run between five and ten years. This is particularly relevant for the Universities and Sports & Leisure activities. Moreover, long-term contracts are often the biggest and most complex contracts to execute.

Factors such as:

  • inaccurate pricing assumptions;
  • a lack of definition or detail in the scope of services;
  • underestimating the complexity of the scope of work; and
  • inadequate contractual clauses;

during a bid proposal can lead to low margins or even losses on the contract, either in the startup phase or at a later date.

 Risk Level: Medium

Examples of Mitigating Activities

  • Benchmark exercises, site visits, full due diligence and the use of technical expertise are all part of the process to establish costs, seasonality of services and base-line estimates (monitoring of cost and performance indicators to verify the relevance and competitiveness of our offer).
  • Identification of the main contractual risks (from the analysis) and the deployment of measures to compensate these risks.
  • Use of costing models and benchmarking to validate assumptions.
  • Robust, standardized and transparent costings.
  • Integration of different stakeholders in the review process to better anticipate possible issues.
  • Strict execution of Sodexo’s key processes for solution and contract design & solution mobilization.
  • Definition of key contract terms per segment.
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