Commercial Cleaning – Growing & Consolidating: As an essential service, the commercial cleaning sector as a whole is weathering the recession. However, Jani-King GB Chairman, Ian Thomas reveals that the changes in the industry are strengthening the position of national networks such as franchises.

PERFORMING IN THE DOWNTURN As companies look to focus on their core competencies and outsource areas that are noncore, commercial cleaning is seeing increasing growth in business from the top end ‘blue chip’ segment of the market. The commercial benefit to the client is a reduced direct headcount and the potential cost savings of using an external supplier who can provide a service more efficient because it is the supplier’s core business. This is recognised by the Procurement/Buying departments of companies employing central purchasing. The selection of the cleaning contractors is taken out of the remit of operations or field-based management and centralised behind a disciplined tendering process. The overall impact of this trend, coupled with legislation drivers, has been an acceleration of growth in the contract cleaning market.

According to a Keynote Marketing Report the market is growing at 10.7 per cent compound annual growth and is forecast to hit £6 billion by 2010.

Within this growth there are two market segments that reflect the internal dynamics of the industry:

A consolidation within the industry where of the total £6 billion market size approx 91 per cent of the industry volume is controlled by about 125 cleaning companies. For perspective there are over 10,000 VAT registered cleaning companies in the UK so 91 per cent of the industry volume is concentrated in the hands of 1.25 per cent of the companies.
As a result many of the small independent ‘mom & pop’ type cleaning operators seen in Yellow Pages advertising are being forced out of business as they are unable to compete with the larger national or regional operators.

In summary you have a rapidly growing and consolidating industry that is underpinned by the key drivers of outsourcing to focus on core competencies coupled with legislation drivers.

PRIMARY AREAS OF GROWTH Overall Jani-King’s system wide turnover in the UK grew by 49 per cent in 2008. This has predominantly been driven by contract wins amongst ‘blue chip’ companies in a competitive tendering environment and an extension of contracts with more sites where Jani-King is already a preferred supplier. Examples of this are: Odeon Cinemas, where Jani-King now services 85 locations of the total of 112; and H&M Hennes, where Jani-King successfully restructured the service level agreement with the customer to offer it cost savings at no margin erosion to Jani-King and its franchise owners.

This type of win/win negotiation requiring flexibility from both the supplier and customer is key to the future of the industry. It is simply bad practice for a customer to demand cost savings in the tough recessionary environment without showing flexibility to the supplier to retain a commercially viable profit

Without this type of negotiation the risk the customer faces is that it will beat suppliers into agreeing unviable contracts which will ultimately drive the supplier out of business or force them to start operating illegally (such as paying staff below statutory minimum wage levels).

Driving awareness of this issue among customers is critical and major brand customers serviced by Jani-King such as Next, Premier Inn, and Ten Pin Bowling Alleys have proved sensitive to the importance of achieving a ‘workable contract’. The examples of Next, Odeon and Premier Inn are particularly relevant. All three are extremely well run companies and recognise that a specialist external/outsourced cleaning contractor offers quality and cost benefits verses in house models. Consolidating more volume into the hands of fewer external cleaning suppliers maximises the benefits as it gives the supplier more scale which in turn can be passed on to the customer in the form of cost efficiencies


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