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Aramark confirms its ability to serve customers during coronavirus pandemic

March 20, 2020

Aramark, a global foodservice contractor, released a statement emphasizing its financial ability to withstand what it called the rapidly changing market dynamics created by COVID-19.

"We recognize that in this fast-moving environment, it is appropriate to be in more frequent communication with our stakeholders, and this communication is a first step in that direction," CEO John Zillmer said in a prepared statement.

While impacted by recent closures, a vast majority of accounts continue to operate in some manner, such as grab-and-go meals to fulfill the free and reduced program in schools, the statement said. For those education clients who may close early, Aramark will accelerate the standard end-of-semester summer wind down of those locations in real time, thereby managing costs to appropriate levels.

The sports and entertainment sector has been impacted by the suspension of professional sports seasons and postponement of concerts and events. Leisure has seen some impact related to national parks, but many sites remain open, the company said. Corrections has not been materially affected.

Office closures and remote working have reduced catering and overall volumes, but the company continues to serve businesses and geographies that still require service, including the manufacturing and pharmaceutical industries.

Aramark operates across 18 countries, with the largest presence in Canada, Chile, China, Germany, Ireland and the United Kingdom. The company's business in China, which is primarily weighted towards healthcare, has recovered and been awarded new contracts, the statement said.

While it is too early to determine the full impact of COVID-19, the company believes revenue declines would have a drop through of approximately 15%-20% on operating income.

The sports and leisure and business and industry lines of business generally have mid-single digit operating margins, while healthcare, education, corrections, facilities and other generally have high-single digit operating margins, the statement said.

For up-to-date coverage on how the coronavirus impacts convenience services, click here.