Compass India expands footprint with 70% stake in ICS Foods

Compass India Food Services, a subsidiary of British Compass Group Plc, has acquired a 70% stake in Delhi-based ICS Foods Pvt Ltd. This acquisition, alongside their 2021 purchase of the food-tech startup SmartQ, positions Compass Group for a projected 30% CAGR in India’s growing food services market. The sector, valued at Rs 5.69 lakh crore in FY24 and contributing 1.9% to GDP, is expected to grow to Rs 7.76 lakh crore by FY28, with organised players like Compass poised to expand in a market where a significant portion remains unorganised. Major competitors include Sodexo and K Hospitality.

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Compass India Food Services, a wholly-owned subsidiary of the US$ 40 billion British Compass Group Plc, has taken a 70% stake in Delhi-based food and beverage catering company ICS Foods Pvt Ltd. Compass India Food Services is India’s leading food service and support services company, known for providing catering services to businesses and organisations. They operate in over 45 cities and serve millions of meals daily.

This is Compass’s second acquisition in India, and the company caters to Procter & Gamble, Nestle, Coca-Cola, Google, Microsoft, Netflix, and a number of other Indian companies.

Compass Group India’s managing director, Vikas Chawla, confirmed the acquisition to ET. “Post-Covid, return to work is a big story; the resurgence has been very significant, and we see people returning to offices for at least three days, which is helping our businesses,” he said.

“We are looking at a 30% CAGR in the food services business sector with the ICS acquisition… we are also actively in discussions with other potential companies with synergies and looking at 25% growth through acquisitions,” he stated. According to the ICS website, the company provides food services to Maruti, Dabur, Samsung, and Honda at their corporate locations using on-site commercial kitchens.

Compass Group acquired food-tech startup SmartQ in 2021, which offers digitisation in the cafeteria segment, including centralised and automated billing. According to its website, Compass Group is the world leader in contract food and support services, with 500,000 employees and a presence in 45 countries.

According to a National Restaurant Association of India (NRAI) report published on July 10, India’s food services sector will grow at an 8.1% compound annual rate between 2024 and 2028. The organised sector is expected to grow at a faster rate than this, at 13.2%.

Food services is the third-largest industry in India, valued at Rs 5.69 lakh crore as of FY24, contributing 1.9% to India’s GDP, and is estimated to grow to Rs 7.76 lakh crore by FY28,” the report adds.

The domestic food services and catering market in India is estimated to be worth Rs 70,000 crore, with one-third of it unorganised, indicating that organised players have room to grow. Sodexo, the Indian arm of the French food services and facilities management company, and the domestic company K Hospitality are the other major players in this market.