Universal Registration Document Fiscal 2025

6 Risk Management

CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS

 Risk level: medium

CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS

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.

CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS

Category: Clients/consumers

CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS

Impact

Consumers expect a personalized meal experience. They want the flexibility to enjoy food in various ways and at times that suit their individual schedules. Their expectations include more choice, more convenience and healthier options, all supported by technology that enables an seamless and efficient food 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

  • Multi-channel delivery models which offer consumers greater flexibility for food consumption.
  • Increased use of technology, for example robotic food delivery on campus, 24/7 automated kiosks, 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.
Download the table

BIDDING RISKS

 Risk level: medium

BIDDING RISKS

Risks relating to the commercial and contractual model and the scope of services included in a client contract.

BIDDING RISKS

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 Sodexo's 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.
Download the table

COMPETITION

 Risk level: medium

COMPETITION

Sodexo faces both established competitors and new industry participants at the local, national and international levels: risk of market share loss and loss of growth momentum.

COMPETITION

Category: Clients/consumers

COMPETITION

Impact

Sodexo operates in a highly competitive environment. If competitors’ offers are more competitive, innovative, or attractive, this could lead to a loss of market share, thereby reducing growth and profitability.

Risk level: medium

Examples of mitigating activities

  • Acceleration of the development of food models that integrate new ways of producing and distributing food services.
  • Roll-out of enhanced branded offers to meet client and consumer needs.
  • Investment in digital technology including digital applications, food solutions such as automated kiosks with hot and cold food options, digital retail services, robotics to facilitate cleaning and the use of artificial intelligence helps Sodexo to enhance the consumer experience and take advantage of the opportunities created.
  • Strategic acquisitions to expand Sodexo’s offers.
  • Strengthening of commercial teams on the ground.
  • Competitor benchmarking.
  • Sector studies.
Download the table