Hello, welcome to our Investor Day. Thanks so much for being with us. My name is Dianne Salt, and I'm the Chief Communications Officer and a member of Sodexo's executive committee. I have the pleasure of being your emcee for today's broadcast. Welcome back to those of you who were with us two years ago, and welcome to those who are joining us for the first time. Obviously, with COVID, we're not able to host this event in person, but it's great that so many of you could be with us here virtually. Because our speakers are connecting from wherever they're based, there may be moments when you experience a slight delay. Please bear with us and the technology. We're doing our best to make this a dynamic experience. As you can see, we're not wearing masks.
This is so that we can engage with you in a more personal way. Rest assured, we have all the necessary safety protocols in place here at the studio, including the appropriate social distancing. This Investor Day is being recorded for those who are unable to attend. The recording will be posted on our website shortly after the broadcast. I'd like to start off by introducing our CEO, Denis Machuel, who is here with me.
Hi, Dianne. Hello, everyone.
We have a packed agenda for you, and we've worked hard to try to make this a worthy investment of your time. We intend to finish promptly at 5:30 P.M. Paris time. Today, you'll hear from a number of our executives. We also have some great videos and client testimonials to share with you as well. Some of these visuals we're using today were captured before COVID hit. You'll see a mix of people with and without masks, as well as varying degrees of social distancing. We'll also have four Q&A sessions, one after each set of speakers. For those of you who wish to ask questions, you'll need to connect to the conference call. You have the numbers, but if not, they're on sodexo.com.
However, as there is a lag between the webcast and the call, we strongly recommend participating in the meeting for the webcast until the Q&A sessions begin. Denis will kick things off momentarily with an update on what we have accomplished since our last Investor Day. After that, you will hear from Cathy Desquesses, our Chief People Officer, and Marc Rolland, our CFO, on our human-centric and our cash-generative business model. After that, Denis will then present his perspectives on what comes next, followed by a Q&A session with Marc and Cathy. We will then hear about some of the major trends we are seeing in our markets from Sylvia Metayer, our Chief Growth Officer, François Blanckaert, our Chief Procurement Officer, and Bruno Vanhaelst, our Chief Sales and Marketing Officer, who will be connecting with us from the U.S. This will be followed by another Q&A session.
After that, we'll have a short break before the second part of the broadcast. After the break, you'll hear more about how we're responding to some major trends in our business, particularly in corporate services, from three of our global executive committee members, namely Sunil Nayak, our Corporate Services CEO Worldwide, who will be connecting from London; Aurélien Sonet, our CEO Benefits and Rewards Services Worldwide; and Sarosh Mistry, our Region Chair for North America, who will connect from the U.S. Their remarks will be followed by a Q&A. After that, we'll end the day with Denis' wrap-up and a final Q&A with both Denis and Marc. Let's get started. As in all Sodexo meetings, we'll begin with a safety moment, and this one is from our team in APAC.
I hope you enjoyed that video showcasing some of the exceptional work our teams are doing in today's new COVID context to create a safe environment. Without further delay, it's my pleasure to pass the floor to Denis.
Thanks, Dianne, hello, everyone. Welcome to our virtual Investor Day. Thanks for being with us. While a virtual gathering can never replace an in-person meeting, we felt it was important for us to have this update, and I want to thank you for being here. In this time together, we'll share with you how Sodexo is navigating through 2020, and what we can see for the future. No one has been spared the tsunami that is COVID. As the American academic Jon Kabat-Zinn says, "You can't stop the waves, but you can learn to surf." The story we want to share with you today is about how we're facing these peaks and troughs, how we are investing and preparing for long-term growth. Sodexo is resilient. We're going to tell you about how our clients increasingly need and want integration of services.
Our integrated model at the heart of our DNA has been a key stabilizer in the crisis and gives us confidence in our horizon. Also in our DNA, the Bellon family's control provides essential stability and independence and protects a culture that is unique. Today, we will showcase our progress since the 2018 Capital Markets Day. In particular, I want to start with how we tackled the deep executional issues that we had. What have we done over the past three years? With a strongly renewed executive committee, I have reboosted the business. We have worked with one single overarching goal: to execute our focus on growth agenda, specifically concentrating on addressing areas of underperformance. Here is what we tackled. First, no surprise, we focused on the challenges in North America healthcare and education.
We've done a lot to turn the situation around and are starting to see results. What actions did we take? First, some drastic changes in the leadership teams. We made changes in both healthcare and universities, from the CEOs down to several site managers. We simply needed a new approach driven by new leadership skills, discipline with fresh, creative thinking, and a renewed focus on winning. Filtering this to the business takes time. Here are some metrics of our progress. In healthcare, retention is up 130 basis points since 2018. In universities, excluding one voluntary exit, we've been over 95% retention for the past two years, even though we are not yet back to where we wanna be. We exited unprofitable contracts. For healthcare and universities, this has meant a purposeful reduction of more than EUR 200 million of revenues. We measure and we track.
Our performance management dashboard STEP, introduced at the last Capital Markets Day, is helping improve productivity in several segments already. For example, pre-COVID in 2020, in schools in North America, we gained 98 basis points on our GP to labor cost. In healthcare, we gained 200 basis points on our GP to food costs. Overall, in fiscal year 2020, the retention in North America went up 230 basis points despite several significant contract exits in healthcare and universities. We are advancing in this key market. Second major area of focus. We have rebalanced our offer between food and FM, global and local. We have put food services back into the heart of everything that we do. We have reasserted our excellence in food by driving innovation in our offers and in our menu choices, making a strong place for organic, locally produced, and seasonal products.
We have rebalanced our portfolio of contracts between global and local, single service, multi-service, and food and FM. By being much more selective on the large contracts, particularly in corporate services. In H1 2020, the ratio of the food only and local contracts was around 75% and 50% respectively. On the global contracts, we are only targeting the right ones and being more demanding on margin expectations. At the same time, we remain focused on our FM offer and on our integrated offer. Integrating our broad spectrum of activities has never been in such demand as it is today. Clients have realized and welcomed the breadth and depth of these solutions that Sodexo provides. We are well-positioned in places that have showed resilience, be it our strategic accounts that continue to outperform, or our position in developing economies that have also provided growth and, more recently, resilience.
FM services represent 40% of on-site revenues in fiscal year 2020. For global strategic account, FM is around 75%. As we continue to sign, retain, or extend these accounts, the FM activity continues to gain share. As we cross-sell, the integrated FM has expanded. The COVID crisis and the work-from-home phenomenon has given a massive boost to client requests for on-site benefits and reward joint offers to serve employees at work and at home. BRS is digitized and agile and is definitely an engine for profitable growth. Finally, our third major area that we tackled. We renewed the culture of discipline and accountability by a relentless focus on execution. Our STEP program and its dashboard is now online, available across 19,000 sites in 17 countries. So far, it tracks 80% of Sodexo's revenues. We will have it fully deployed by October 2021, as planned.
STEP is easy to use and fully integrated, so we can see the performance of the activities at each level, from the site to global. We have improved targeting and signing discipline, together with improved execution on underperforming large contracts. I mentioned this earlier for North America, but more generally across geographies and segments. We are renegotiating underperforming contracts and eradicating any loss-making contract globally. Our signing discipline is better. We don't go near unprofitable contracts anymore, and our targeting is much stricter and carefully aimed towards quality. Ultimately, all of this will boost underlying profitability. Besides tackling tough spots, let's look now at how we're driving our growth agenda. As you know, four key initiatives are really driving performance. Number one, we are streamlining the organization to improve operational efficiency and productivity. We have de-segmented in certain countries to optimize the allocation of resources.
We have rationalized our portfolio. We continue to exit non-strategic countries. Our geographic footprint is down from 80 countries to 64 as of today, and we are close to reaching our stated objective of 50 core countries. We've concentrated back offices in finance in three centers. There are even more efficiencies to be had through our ongoing savings program. Final aspect of our drive towards operational efficiency, we've invested annually an additional EUR 60 million to consolidate our IT enterprise architecture. Number two, we've created client and consumer centricity, especially on food services. Thanks to our new insights in AI, we know so much better what our consumers want, so that we can anticipate food trends, improve sourcing, and standardize our processes. We streamline our offers and concepts by nearly a half. Our sourcing is even more virtuous.
This means better product standards, tracking of progress against our menu and CSR targets. We have reinvested to make Sodexo more digitized and consumer-centric. In digital, I'm excited by our investments in our two strategic partners. With Meican in China, we created a brand-new consumer experience for Chinese consumers. With Zeta, we have a platform to leverage the full potential of digitization of benefits and rewards and on-site food services, you will hear more from Aurélien on this later. During the crisis, we accelerated new food tech solutions, such as click and collect and food delivery. We launched our Deli Express in Brazil and in Singapore. We created 70 partnerships between our BRS activity and major delivery platforms. In the U.S., we recently invested in Alchemista, which offers new multimodal, multi-channel experience to food, especially where clients do not have on-site food options available to them.
Finally, we overhauled our sales culture and how we market and win business, and we are rapidly digitizing, which is a huge strategic boost. In 2018, I appointed Bruno Vanhaelst to develop a holistic approach to marketing and sales, and thus sharpen our sales culture. Under Bruno's leadership, we have reignited the sales obsession at Sodexo. We've also deployed in North America an updated version of Clients for Life. This is going well with retention up, bringing us closer to our group-wide target of 95%. Third driving initiative, anchoring corporate responsibility into everything that we do, which differentiates our offer and our value proposition. Corporate responsibility has been part of our DNA and the way we do business since our creation, and we are uniquely leading our industry with our strong ambitions. Some key points of pride.
In 2019, we were number one in our industry for the 15th consecutive year on the Dow Jones Sustainability Index. In 2020, we achieved the highest marks in SAM's Sustainability Yearbook for the 13th consecutive year, as well as Gold Class recognition by EcoVadis. Our food offer is more sustainable than ever. Fran ç ois will come back on this. Reducing waste is also an environmental and business priority. Waste Watch, our game-changing food management program, has an ambitious objective of reducing food waste on our sites by 50% by 2025. This commitment is a win-win. In 2019, we were the first global food services company to connect its financing towards actions to prevent food waste. This environmental commitment has been key to winning some amazing prestigious contracts.
For example, this year, we won a contract with a French leader in food products for their HQ in France, or a global contract with one of the largest pharmaceutical leaders in the world. It is a key differentiator for Sodexo. Last, we have an ambitious climate change emissions target. Most companies talk about Scope 1 and Scope 2, but it's not strong enough. We made a commitment on Scope 3. We were the first company in our sector to publish and set objectives for Scope 3 emissions, accounting for 98% of our total emissions. Now, people. As you know, people are the essence of our services, our growth, and our success. We employ 420,000 people worldwide, and we take their learning and development seriously to help them grow and serve our clients better. We invested massively in sales training. Two years ago, we launched our sales academy.
500 people have been through it. Chef training at our Chef Academy has already enriched 2,500 chefs across Sodexo. We invested in digital and innovative culture training to enhance agility as our people must be our main change agents. Performance management has also improved, thanks to the STEP dashboards that enable a more tailored approach to incentives. To conclude, in fiscal year 2019, we registered our best growth trajectory for the last seven years. Up to the end of February, we were on track to deliver our fiscal year 2020 guidance and our objective of increasing the margins to over 6% in the coming years. We have transformed our execution culture in less than three years. We've made great strides in addressing the issues in North America, and we have delivered on a large part of our strategic agenda.
This pandemic is certainly the most serious crisis that Sodexo has faced in its 50 years of history. The teams rose to the occasion and demonstrated that even in a large structure, they can be agile. I want to warmly thank them and show you in the next couple of minutes what they've done.
No one was ready when COVID-19 changed our world overnight. We were there on the front lines supporting our clients, first in Asia, then worldwide. We saw it coming, we learned, we were prepared. We responded, we went to work, we stood tall. With team spirit, service spirit of progress, we were there on the front line, always inspiring, dedicated, cleaning, feeding, supporting, protecting, above all, caring. We adapted quickly, redeploying team members from schools, events, stadiums, and offices, to where we were needed most. To hospitals, to seniors' homes, to testing centers, to all those places that absolutely needed to continue to operate. Where we were needed. Donating and redistributing food to support those who needed our help, our clients, consumers, and our communities. Our clients recognize that more than ever, we stand together with them, improving the quality of life.
We launched a global Sodexo relief program, funded by contributions from Sodexo leadership teams, to help our people who found themselves in difficult situations. We stood together. We adapted, anticipating and planning, bringing our expertise and innovating to support our clients faced with challenges, to create safe environments in an uncertain world. Our mission became essential to the world, bringing our people out of the shadows and making them our everyday heroes. We imagined Rise with Sodexo, using our expertise and agility to help our clients create confidence, reopen, and create safe environments to bring their employees back to work, their students back to the classroom, their fans back to sporting events. Through innovation, we developed new services and offers responding to new sanitary restrictions and evolving consumer needs. Bureau Veritas Hygiene Verification Label to build confidence. A certificate of safety and quality assurance for all Sodexo procedures and services.
Our medical advisory council to advise on health and safety protocols and standards. The way we engage with people and encourage safe behaviors. The latest information to ensure continuous adoption of best practices. We salute our people who are committed to our mission in such difficult and uncertain conditions, and are proud of everyone who cares enough to stand tall and stand together, often putting others before themselves and their families, to continue to work when and where they are needed most. We thank and stand together with our people who were affected by the pandemic, both personally and professionally. In a world that remains uncertain, our people are the heroes behind the masks and are essential to bringing our expertise, today and tomorrow, to the communities we serve. We have proved our commitment, our agility, our values, to ensure equality of life. We responded.
We care for each other. We stand up. We stand tall. We are united, and we continue to care for each other. We responded. We stood tall. We stand tall.
This video epitomizes our great people and the critical importance of our services. Our biggest advantage is a resilient business model that allows us to seize market opportunities as they emerge in an environment which is likely to remain very difficult for a while. Dianne?
Thank you, Denis. That video really does capture the team spirit at Sodexo, as well as the effort from all the employees during the crisis. As we move to the next part of our agenda, I'm pleased to pass the floor to Cathy Desquesses and to Marc Rolland. Over to you.
Good afternoon.
Thank you, Dianne. Hello, everyone. Marc and I are going to cover the solidity of our financial structure, and importantly, how we continue to manage our teams in the context of this challenging environment, adjust our workforce to meet the changing needs of our business, and ensure we stay true to our values and commitment to people being the alpha and the omega of Sodexo.
As you know, our business is by design founded on two pillars. On the one hand, human-centric and labor intensive, and on the other hand, asset light and cash generative. Those two pillars are fundamental to Sodexo sustainability and our confidence in the future. A couple of days ago, we announced that in 2020 we generated cash, EUR 72 million, despite the worst crisis that we've ever seen. This includes a positive EUR 200 million of government aids through delayed payments and a negative EUR 150 million make-whole linked to the USPP early reimbursement. When we got hit in March by the drop in cash sales, we were still paying the suppliers from the time when everything was normal and client paid a little more slowly. During H2, we maintained our payments to suppliers, and we pushed hard on collection and a reduce in value.
Our working capital is by design negative in BRS, of course, but in onsite as well. Both BRS and onsite generated a positive free cash flow in the second half. Additionally, I would like to highlight key strengths of our balance sheet. We ended the year with EUR 5.1 billion of liquidity. Our net debt is amounting to EUR 1.9 billion, which is better than at the end of H1, but EUR 655 million higher than last year. Our net debt ratio is now 2.1 turn. We have no covenants anymore on our EUR 5 billion gross debt, and average maturity is 5.7 years. On cash collection, here, we are showing how we used our cash for the period 2017 to 2019. There was no surprises. In line with what we said during the 2018 capital markets day, it was balanced. About 1/3 shareholder returns, 1/3 CapEx, and 1/3 M&A.
In 2020, we buckled down on cash. While the dividend was voted and paid before the COVID crisis had arrived, we paused on M&A and CapEx. In the second half, our CapEx was half of what was planned by pushing back projects. Only BRS, IT, and digital CapEx were maintained at pre-COVID levels. As a result, the CapEx to sales ratio was maintained at circa 2%, despite the reduction in revenue. We still expect the run rate to increase to around 2.5% in the midterm, as we expect to invest in CapEx to support the development of the new food models in the next two years, filling the gap of the slower ramp-up in universities and sports and leisure. With only EUR 18 million spent this year, we were extremely selective in our M&A in fiscal 2020, to say the least.
Going forward, we will look at opportunities to support our acceleration in the new food models and GPO, to support BRS digital transformation and consolidate its positions, to continue selective PHS acquisition, and especially in home care, and to take advantage of opportunities to consolidate our positions and activities. We believe this could be around EUR 400 million of acquisitions per year. For 2021, we are also very focused on selling non-core activities and geographies. No buybacks are planned despite the share price. I highlight that this is not because we don't believe that our shares are seriously undervalued. As we will come progressively out of the crisis in fiscal year 2021, we want to allocate our cash in priority to investments to prepare the future.
Thank you, Marc. You've explained how we've been impacted financially by COVID. I'd like to spend some time talking about our people. Overall, the number of our employees is down 50,000 to date due to COVID, going from 470,000 in fiscal 2019 to 420,000 today. This is due to multiple factors, attrition, layoffs, performance management, tightening of short-term contract usage, of course, less recruitment than normal. Our teams swiftly responded to adjust our global workforce as volumes fell, always with respect and fairness. When we look at the departures due to COVID, the majority of that impact has been felt in North America. Our teams in Asia Pacific, Latin America, Middle East and Africa have also been impacted, of course, not as heavily as in North America. Our teams in Europe have suffered, too, to a lesser extent than the other parts of the world.
When we look at this slide, it's easier to understand why the impact varies so much across our different geographies. The impact has been felt hardest in North America, as I said, when there have been no government-funded unemployment measures in place than in Asia Pacific, Latin America, and Middle East Africa. In Europe, where most governments have implemented furlough schemes and partial employment measures, the impact on our people has been lower until now. Very early on in the crisis, we understood that COVID would have a significant social impact on our people. Our first priority was to maximize business volumes in order to keep people employed as much as possible. When we could not keep them employed, we mitigated the impact by creating an employee relief program, committing EUR 30 million to supporting our most vulnerable employees.
The program was enabled by our senior leaders foregoing their annual bonus for about EUR 20 million, and the rest by the company.
Many governments in Europe are progressively extending their furlough programs to 2021, but they are adding more conditions. At the same time, we have to be realistic in our planning and the actions we take. We must adapt our labor cost to our volumes. To remain agile and protect our profitability going forward, we decided to activate a number of restructuring plans as part of our Group Effectiveness and Transformation program. We call it GET. This GET program further adjusts our on-site labor cost to revenues, protecting our gross profit. Much of the benefit will be in the form of cost avoidance as the furlough programs lift. It also achieves a sustainable reduction of our SG&A through simplification of our structures. The program started in H2 and will be implemented by the end of fiscal 2021.
The total cost is estimated at EUR 350 million, of which EUR 158 million in fiscal 2020, so another EUR 192 million in fiscal 2021. The program will achieve cumulative annual savings of EUR 350 million in 2022, half of which in recurrent SG&A, the rest being on-site cost avoidance. I now hand you back to Cathy.
We don't make any of these decisions lightly, but we make them decisively. There's no denying that the next few months are gonna be tough. We're going to make some further difficult decisions that will impact our people, but we're wholly committed to treating them with respect and fairness and doing whatever we can to minimize the social impact while ensuring we continue to motivate those people who will remain with us. Our diverse workforce is a real differentiator, grounded in our values since Sodexo was founded. In our recent engagement survey, 82.4% of our people are saying that they feel that Sodexo values diversity and inclusion. I would just like to highlight that 40% of our 200 senior leaders are women. That brings me to my final point about engagement. We launched our global survey at the beginning of September with a response rate of 59%.
We achieved an engagement rate of 80%, which is not only significantly higher than last time, but it also tells us that even in these difficult times, employees are engaged with our purpose. Those results give us confidence that we are taking a fair and respectful approach. As leaders of this business, we have the duty to make the hard decisions, but we do it with real care for those people leaving us and importantly for the talent remaining, who are critical to our future success. As the job market reopens, I am convinced that candidates and employees will favor those organizations who treated their people well during this time of crisis. Brand authenticity, business integrity, culture, values, will be key levers in the war for talent.
Thanks very much, Cathy, and thank you, Marc. It's great to hear how we have our focus on people while delivering results. I'm happy now to turn the floor back over to Denis, who will share his perspective on what lies ahead. Denis, the floor is yours.
Thank you, Dianne. Thank you, Cathy and Marc. Before we wrap this section of the day and head to our first Q&A session, I wanted to reemphasize that our model has proven its relevance in this year's crisis. We have all worked brilliantly together and stepped up to serve our clients, offer new ideas, and negotiate well to find win-win solutions for everyone. The Sodexo teams have been truly agile and entrepreneurial. From day one of the crisis, we had three priorities, people, clients, and cash, and we moved fast. Marc and Cathy have already explained how we managed our people and how we secured our cash position. I want to spend a few minutes talking about how we supported our clients. For clients, the focus was on securing business continuity, ensuring consumer safety, and thus safeguard retention.
We've done really well on all fronts, serving our clients in very challenging conditions. Let's have a look at this testimonial from one of our healthcare clients in Nebraska.
We've always had a strong partnership with Sodexo. They've been on campus for over 30 years. They provide our housekeeping services as well as our food and nutrition services for the health system. As well as the food choices, they also made sure that there was plenty of linens, that they were rooms stocked appropriately, as well as they even did the little extras like birthday parties and celebrations for anniversaries. All the little things that none of us even thought about. They took the time to get to know who these guests were and what they needed during this difficult time, being away from their homeland as well as away from their families. As an administrator, I was extremely impressed with their ability to take on these new duties, but also continue to maintain the operations throughout the health system. I mean, this is a big health system.
We still had needs on the main campus, and they worked with their staff, had tons of volunteers picking up extra hours to be able to meet the needs of Camp Ashland, as well as meet the needs of the health system. They provided an exceptional experience to our guests.
We also won important new business, including testing centers in the U.K., additional disinfection cleaning services for our global accounts, as well as supplementary FM services for our mining contracts to ensure they could offer social distancing to their employees. The opportunity ahead is now to turn our activities into a more holistic offer for all our clients. Let's now look at how we want to show up and compete. There is no doubt that our transformation has to keep up with this relentless pace of change. Effectively, we are doing three things. We rationalize, we enable, and we transform. Let me focus on how we rationalize the cost base to safeguard the bottom line. Marc has already set out how we are going to achieve this through our GET, Global Effectiveness and Transformation program, launched in July. What are we doing? First, we optimize our portfolio of services.
Our hard FM review is done, and we are rationalizing our hard FM portfolio to keep only contracts where we know we can add value, ruthlessly. Number two, we optimize our country portfolio. We are focused only on geographies with the biggest potential for us. Number three, we safeguard our gross profit. As a result of the crisis, we've been forced to rightsize our labor force, and we are continuing to keep a close eye on this. Number four, we continue to have a strict focus on execution. As we redesign and optimize, our structure becomes even more agile. We are reducing HQ and transversal functions, centralizing them where it makes sense. This means thinner global segments to drive investments and resources closer to the front line. All these measures will generate about EUR 175 million of SG&A savings. What do we mean by enable?
We are investing in sales, retention, marketing, digital, and IT to accelerate top-line growth, as well as continuing to invest to enhance our execution. Sylvia, Bruno, and François will tell you more in a few moments. Rationalize and enable will bring SG&A to our lowest level in 15 years, while making sure we maintain the necessary level of investment to generate growth and support local recovery. As a result, we will be more competitive and we will enhance growth. Finally, transform. We are transforming our core food business. Sunil, Aurélien, and Sarosh will develop on how we are creating holistic offers that combine all our solutions to gain market share and grow the top line. We know that we can deliver great performance going forward. Let me remind you that our total addressable market across our three activities and segments is measured in trillions.
Thanks, Denis. What a great testimonial from the client.
Yep.
We'll now open it up for Q&A. Denis, Cathy, and Marc are ready to take your questions. Over to you, Dulce, to get us started.
Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star and one if you wish to ask a question. Your first question comes from the line of Simon Lechipre from MainFirst. Your line is open. Please ask your question.
Yes, good afternoon. Three questions, if I may. First of all, in North America, you mentioned what you have done to address your issues. Just wondering how happy are you right now with the performance of the specific healthcare and university businesses, and what are the key aspects you need to further improve to achieve the right performance? Secondly, in terms of profitability, which proportion of the savings you announced this morning you need to reinvest over the next two years? Related to this, when do you expect margin to be back to the level of 2019? Lastly, you mentioned CapEx would accelerate, notably driven by new food models. How do you see the return on this incremental CapEx compared to the historical return of the industry? Thank you.
Thank you, Simon, and thanks for being with us. I'll take the first one, I think. I'll talk about the margins. Marc will talk about profitability and CapEx. As far as North America is concerned, I think we've definitely stabilized the business. We have much stronger operations, both in healthcare and universities, and it shows by a more solid gross margins. When you have a solid gross margin, you know that your operations are more solid. We've improved retention, I mentioned that earlier. We still have to improve the momentum in sales. We are reigniting sales. Development is still an area of progress that we have to do there. Overall, I think I'm confident in the effort that we are doing there.
In terms of margin, and Marc will go in more details on the profitability, but in terms of margins, what I can tell you is we've stabilized our margins pre-COVID, and we were on track to improve the margin from fiscal 2021 onwards. Of course, the COVID crisis has stopped this momentum. However, overall, no fundamental things have changed despite the COVID, and I still absolutely believe that once the crisis is over, we can rebuild our margins back up again. The Global Effectiveness and Transformation program will definitely support this. Marc, in terms of.
In terms of the savings, as we explained and Denis mentioned it, 50% of the program is really focused at delivering savings at SG&A levels. We are expecting savings of EUR 175 million on the SG&A, and this will be achieved by 2022. That will help build up the margin as we move forward. With regard to the CapEx, the CapEx on the new food model and the CapEx on GPO, they will have high returns. We already have CapEx in central kitchens, in commissaries, and we know how to run this operation. We will just invest more because this is what's needed to support the growth in food. We are expecting the ROCE to remain. Our target for ROCE is 15%, and this does not change.
Okay, thank you.
Your next question comes to the line of Richard Clarke from Bernstein. Your line's open. Please ask your question.
Hi. Good afternoon. Thanks for taking my questions. Just in a previous annual report, I think under your predecessors, you used to highlight that a 1% retention increase led to a 1% gross margin increase. Is that something you still agree with that math? Given you've highlighted some good moves on retention, when would you expect that benefit from retention to come through? Second question, you highlighted quite a few investments you've made in the new food offers. Is there going to be a plan to bring that under one umbrella to have one sort of leading delivery offer to offer to clients? What's the process to get to that? Then also on your ESG criteria, how often does this come up in discussions with clients? How much do you think that is an operational advantage to have that greater investment in the ESG criteria?
Right. Marc will answer the retention margin, and I'll take the two other ones. Regarding investment in new food models, definitely, we're bringing them together. At the moment, we have a common group that oversees that. I have nominated, for example, Bruno Vanhaelst to lead that group in North America in terms of how we accelerate the new food models. Of course, you'll see later that Sunil and Aurélien on what remains the critical corporate services domain, they're working very well together. We are putting our systems together as well to create a joint offer that is seamless for our clients. Will it be one day, only one umbrella, one head? Possibly. At the moment, we are concentrating on accelerating and scaling up all the initiatives that we have there. Regarding ESG, definitely, we see a great momentum in the discussions that we have with our clients.
I mentioned earlier this great win that we've had with a major food product manufacturer. We have lots of conversations with our strategic accounts. Even in energy and resources, this is a big topic now. We believe that we really have market advantage there. We've been in France, to come back to that. We've been sustainable sourcing for many years. We will really accelerate that because we will take market share thanks to our positioning.
Yeah, the math does not work. I will check on when we did say that. 1% of revenue is EUR 200 million, and 1% on margin, it's also EUR 200 million, so it's not possible. What we always said is that in margin, there is obviously a greater advantage to keep the business we have because it is less costly to keep what we have than to re-sign and ramp up the margin. There is a margin differential between an existing contract and a new contract. Margin varies. If you assume it's 500 basis points, and I don't want to be quoted on that further than this call, 500 basis point on EUR 200 million is only EUR 10 million. There is an advantage to keeping existing contract, but the math do not work.
I would add that, of course, retention varies upon the portfolio that you have. We want to retain, of course, the most profitable contracts.
Exactly.
That's for sure. Of course, as all segments do not have necessarily the exact same profitability, there are different ways that retention impacts the margins.
Thanks, Marc. Just so you've got the references, on page 33 of your 2017 annual report, it says.
Right. Look at it. Okay.
A 1.6% client retention increase would lead to a 1.7 points increase in gross margin, but it's a few years ago now. I just wanted to check whether that was still the view.
Okay.
Thanks, Richard. We'll look at it.
Okay. Thanks.
Your next question comes from the line of James Ainley from Citi. Your line is open. Please ask your question.
Thank you. Yeah, two questions, please. Just wanted to ask you about the new business environment and why you think that Sodexo can win better than it has done in the past. Maybe why the kind of post-COVID environment suits your business better than your competitors, potentially. Secondly, on the cost savings, should we think about these as defensive or offensive? In that sense, are these designed to offset cost pressures that you're seeing or potentially lost business that you see, or how much of this should we expect to flow to the bottom line? Thank you.
Marc will answer this one. I'll just say quickly that we are both defensive and offensive. He'll go in greater details. As far as the new business environment, let me just sum up what I see as being the four key takeaways of that ongoing crisis, actually. Why I believe we're really well-positioned. That crisis has highlighted that digitization is critical to operate, critical to liaise with our consumers, and also reassure our clients. Digitization will help increase consumer spend. Sunil will get back to that later. The second is we accelerate the flexibility of our production model and of our delivery model and the convergence between on-site and BRS. That will help us accompany work from home. Again, you'll hear about this later.
We can also take a bigger share of what happens in small and medium companies because they also want simple offers, sometimes even on-site offers with convenience. More to come on this. Definitely, that crisis has demonstrated that the integration of services is a great asset and a great strength when we talk to our clients. Particularly, COVID is very complex to manage. If you have to manage with 10 suppliers, all your workplace or the hospital or the universities, it's very complex. When you talk to one supplier that can embed all the services, it's very, very strong. Last but not least, we mentioned that with Richard just a few minutes back, sustainability. Sylvia will talk about that sustainability at the core of what consumer expect. That will put us in a great place, and sustainability can also help improve consumer spend.
Lots of elements that put us in this new environment, in a great place. Marc?
When we are looking at labor cost on site, obviously, our cost savings program is defensive. We are going to take over the programs and the furloughs will end, and so we need to protect our gross profit. On the SG&A side, what started as a defensive move, we had to adjust to the volume going down, actually was transformed into an offensive move, and the GET program is actually meant to be supporting the rebuild of the margin over time and achieve our midterm objectives in term of margin.
Okay. Thank you.
We'll take one more question. I think we need to move on afterwards.
Next question comes from the line of Jamie Rollo from Morgan Stanley. Your line's open. Please ask your question.
Yes. Thanks. Hello, everyone. Sorry, three quick ones, please. First, is there still a 95% retention target in the medium to long term? Second, can you talk about incentives and how you're switching from the current environment on incentivizing people to reduce costs, and maximize margin, and how you're gonna transition to accelerating again, the top-line growth, which is the old target. Is there anything you can say on the dividend? What's stopped the company paying a dividend in the current financial year, in terms of leverage targets, and what might the payout be? Thank you.
Thanks, Jamie. Yes, definitely the 95% target is still there, and I can tell you I wanna be significantly above. It's gonna take time, but I, you know, I want to improve that. Retaining the clients demonstrates that you have solid services. As Marc said, it's great for the margins and it's what we owe to our clients and to our people. Definitely it's very high in the agenda. As far as the incentives, I think we don't necessarily talk to the same people. We, of course, incentivize our teams to retain the clients. We incentivize also other teams to develop the business. When we reduce cost, we ensure that we reduce cost on the sides while maintaining client satisfaction.
Let me give you a very simple example, Jamie. During that crisis, we've simplified our menus, and clients understand that very well. As we simplified the menus, we've also demonstrated a lot of culinary experience that has satisfied our clients a lot. We've really managed our cost really well. This will help retention. At the same time, when we are already starting to incentivize our teams on the development, we have a more solid pipeline. We can get back to that later.
The Rise with Sodexo offer, that Bruno will talk about in a minute, and I think it's gonna be very interesting to look at this, demonstrates that we can, at the same time, be efficient and reduce our cost, but also create a dynamic with our clients to capture the opportunities that we have ahead of us. As for the dividend, Marc?
As for the dividend, yes, we stopped the dividend for this year because we felt it was inappropriate to pay dividend for fiscal year 2020. It doesn't mean there will not be any dividend in the future, on the contrary. When we look at the balance sheet today, we have no covenant, we have large liquidity. Yes, we have a net debt to EBITDA ratio above two, and we said we would like to stay between one and two. You know, today, we don't come out of a board meeting with a serious constraint on the balance sheet. We have ample liquidity and no covenant. That's it.
Terrific. Thank you. Oh, I'm sorry. Thanks so much for that robust exchange. Really great Q&As. Now we're ready to move to the next part of our agenda. Now I'm pleased to welcome Sylvia Metayer, Chief Growth Officer, who will talk about key market trends impacting our business, particularly working from home, because we know that's on everybody's mind these days. François Blanckaert, our Chief Procurement Officer, on how supply management has become an important growth driver. We're also joined by Bruno Vanhaelst, our Chief Sales and Marketing Officer, who will share more around our sales and marketing transformation. Sylvia, the floor is yours.
Thanks, Dianne. Good morning, good afternoon, good evening to all, Happy to be sharing with you some insights today on Sodexo's growth perspective. The COVID crisis has not changed our fundamental belief that our markets are sizable, and that we can capture growth by targeting growing geographies, by increasing the share of outsourcing, by partnering with clients in dynamic sectors, and, of course, delighting our consumers. At the heart of this crisis, we've demonstrated the resiliency of our portfolio, We are well-equipped to respond to two new factors, sanitary restrictions in the short to medium term, and the acceleration of working from home, which will be a long-term shift. First, how long will the crisis last? Well, clearly, until widespread therapeutic solutions are available, any new infection wave will be contained by social distancing and lockdown, limiting activity on non-essential sites and for non-essential services.
This will play out very differently by country in terms of infection rates and local regulatory response. The length of the lockdowns, government stimuli, and preexisting economic drivers will also determine, very locally, the scale of the economic impact. Predicting short-term is a challenge. We do project China and Asia recovering first from the crisis, remaining our fastest growth market, and regaining its pre-COVID 10% trajectory. The U.S. economic environment should improve next, and this is key, as it continues to be structurally the largest and most profitable of our markets. LATAM and Europe will probably lag the U.S. Given the uncertainty, our priority is to be close to our clients, engaging with them digitally or directly at top level, and continually surveying our consumers. Bruno will show you how we've done that.
Let me share with you now how we're responding to the current change in demand. First, as you can see, hygiene, very unsurprisingly, tops the list of demand. Nearly 90% of consumers surveyed want to see the evidence of hygiene before they return to any site. Leveraging our healthcare business and our expertise in infection prevention, we are deploying clinical-grade protocols worldwide and across all of our services, including food services. These protocols are audited by Bureau Veritas with a visible on-site label for consumers. Second, contactless is gaining ground, especially as it is seen as a prevention measure of infection. We are accelerating existing digital services such as click and collect, food delivery, and digital payments. Of course, Benefits and Rewards is our ultimate contactless service and a great solution for our on-site clients.
We see traceability of supply and local sourcing increasingly drive consumer choices, and this is coupled with clients' need for global scale and supply. François will explain how the transformation of the supply management in which we engaged pre-crisis resonates perfectly with this demand. Last but not least, outsourcing requests are increasing. Cross-selling, more integrated services, larger regional or global integration, and first-time outsourcing. In fact, in our U.S. marketing and sales distribution center, one in three of the digital requests received since the beginning of the year has been for first-time outsourcing. First-time outsourcing is a key factor for growth. In FY 2019, it represented 40% in value of our North American development. We always expect first-time outsourcing to increase when the economy gets difficult. What we are seeing now are clear requests for expert and scaled solutions.
Most of these trends will continue once the crisis is over. You can see it on this slide. This will mean continued service adaptation, especially on delivery and digital. If we want a better understanding of longer term growth, we need to drill down by client vertical, as the impact on each market is different post-crisis. As you can see on this slide, we will revert largely to pre-crisis market growth once the sanitary crisis is resolved. I do, however, want to call out the acceleration on healthcare and seniors markets. Our clients continued to operate throughout the lockdown, they continue to operate now, and they will continue to operate post-crisis. Retail food services were shut down, this is actually a small part of our business.
More importantly, our clients are critically reliant on our services to ensure 24/7 business continuity. This translates into increased volumes, especially for FM. In fact, those services were up 7.4% in Q4 of FY 2020. I think the best is to hear a client explain it.
Holland Bloorview is Canada's largest pediatric rehabilitation hospital. We serve more than 8,500 families every year through both inpatient and outpatient services. We're a top 40 Canadian research hospital. We have an impact on the lives of children and youth, not just in Ontario and Canada, but around the globe. Sodexo has been a really valued service partner to Holland Bloorview for over 30 years. We rely on the Sodexo Canada team for patient and retail food services, as well as environmental services, which include housekeeping and infection prevention and control. Sodexo really utilized its global expertise and immediately provided its on-site hospital teams, including their team here at Holland Bloorview, with direction and tools and supports that were of equal quality and rigor to the protocols that we put in place ourselves across the hospital.
Our Sodexo team was proactive and creative in deploying their environmental services staff to address new pandemic requirements and in ensuring that we had ample cleaning and other supplies to weather whatever the pandemic storm brought us. They worked closely with their Holland Bloorview infection control and facility management colleagues to really fully integrate their practices with ours. They sat, and they continue to sit, at our pandemic planning tables as equal contributors. We really don't distinguish who works for Sodexo and who works for Holland Bloorview. From the very beginning, we've been one team. On the food services side, to support our frontline workers and the broader Holland Bloorview community during the pandemic, Sodexo introduced a grocery to-go program to provide our staff, as well as clients and families, with healthy and nutritious ready-made meals and grocery purchasing options.
Well, if anything, I think it's reinforced in my mind the value of this model, at least for Holland Bloorview. It can be a real struggle if your service provider doesn't share the same organizational and operational philosophy and goals as you do. I would say throughout our business relationship with Sodexo to date, that has been the key to their success in serving Holland Bloorview. There is much in our style of work and culture that seems to align with Sodexo's, and that's why we've extended our relationship with them for another five years.
As I thought, the client does say it much better than we can. This partnership-led demand will continue in healthcare beyond the crisis. With the return of retail food services, new services, such as the ones in testing centers, and also first-time outsourcing, we are looking to sustainable growth in the healthcare market. The market dynamics are much more contrasted for our business and administration clients. On-site services for manufacturing, production, and remote sites are very resilient. These clients have largely not shut down, and our services are even more critical now for them. We expect continued growth in these markets, especially in integrated facility management. Two examples, pharma clients, which represent a majority of our global strategic accounts, are increasing their number of production sites and the volume of outsourced services. We are also seeing, and will continue to see, good growth on mining sites.
The speed and shape of the recovery for the on-site services we deliver in offices will be dictated by the long-term shift in working from home, and this will have a definite impact on the provision of food services. Before we dig down into work from home and on-site services, I did want to highlight that it doesn't impact the growth in Benefits and Rewards Services, which is not linked to the number of employees on-site. In fact, we see growth in BRS as our on-site clients understand that this is a solution for employees at home and turn to us as the only partner who can provide both solutions. How does work from home impact Sodexo's business? First, you should know that pre-crisis, the revenues from food services on office-type sites were of about EUR 1.7 billion, which is less than 10% of our total portfolio.
This may seem low to you, but remember that our portfolio is not weighted to single service food provision, tech clients, or large city centers, all of which are very exposed. To understand the magnitude of the impact of work from home on this portfolio, we've run, since April, 24,000 consumer interviews and more than 1,000 client interviews. I'd like to highlight two caveats to this data. First, employers are still finalizing their policies. In fact, they're actually quite keen to hear from Sodexo what our insights are. Second, consumer data at this stage is still sentiment, and it's evolving. The number of respondents wanting to work exclusively from home, for instance, has been dropping regularly and significantly since April.
What the data tells us, and what is clear, is that employees do want to go back to the office, and they are happy once they are back at the office. They miss the collaboration, they miss the comfortable workspace, and they do perceive a deterioration of their work-life balance when they are working from home. Employers want employees back at the office. The numbers on this slide speak for themselves, but I will highlight the key reasons. Also collaboration, just like for employees, but also ability to innovate, protection of company culture, and the personal engagement of employees. What is also clear is that office workers will not come back five days a week to the office.
Our data shows the rate of working from home will stabilize globally at a mean of two days a week, with a wide standard deviation by country and by industry. Pre-crisis, office employees had already started to work from home, what we need to look at is the net effect. The net effect pre- and post-pandemic is also very contrasted by country. For Sodexo's portfolio of countries and clients, this would translate to a 27% reduction of the time employees spend in the office compared to pre-COVID. You might do the math quickly. 27% of EUR 1.7 billion is EUR 460 million. Does that mean that we lose EUR 460 million of revenue because of working from home policies? Well, actually, we think not.
The first reason is that our data shows us that employees miss the food services at work. That tells us that we can capture a greater share of wallet the days they are at the office with targeted offers. The beauty of the data in surveying consumers regularly is that we already know what they want, and you can see it on this side. The surprise for me is that affordability is not coming out as a top factor as we would have seen pre-crisis. Lots of opportunity to capture share of wallet. Second, employees are requesting food services at home. It's not just that they will need to be fed, but they want their employers to continue feeding them. That's a key part of the relationship. That's great news for Sodexo because we can uniquely help our clients bring solutions to their employees.
With BRS in the countries where we're present, just look at that 26% of respondents asking for vouchers and cards, and also with the capabilities that we are developing around food delivery or have already developed. It's interesting to note that there's also a demand for employee-funded health and wellness support. Sorry, employer-funded, especially on mental health. Our ecosystem of partners can be a solution for this need, and you'll be able to see it when Bruno presents our Rise SAFE with Sodexo offer. Our third reason for confidence is that our clients are seeking our help as they rethink the purpose of their office space. Our people-centric approach and offers in facilities management, workplace services, energy management, and space analytics are really unique on the market to make offices the most engaging, flexible, and productive places to be.
As you can see, we are really well-placed to address work from home, and you'll be hearing more from Aurélien, Sarosh, and Sunil how we are doing this innovatively and proactively. I will end on that note, hoping you now have a better understanding of our vision for the business. Maybe three takeaways from this presentation. Our portfolio is resilient. The market fundamentals remain solid, and Sodexo is uniquely placed to embrace the shift to working from home. I'll now hand it over to François Blanckaert. As I mentioned to you, supply management is key to our growth strategy, pre- and post-crisis, and he will give you perspective on what we're doing.
Thank you, Sylvia. Hello, everyone. It's a pleasure to be here with you today. I'm going to share more about how supply management has become a strategic asset for Sodexo, both to respond and anticipate consumer expectations and, of course, to improve our cost base. Today, our procurement team of 850 people runs EUR 20 billion of spend every year for both Sodexo and Entegra from approximately 150,000 suppliers around the world. We have three objectives: to improve our cost, gain efficiencies, raise competitiveness, then to bring value for consumers to drive top-line growth. All this while ensuring safety and quality and mitigating risk. We are investing EUR 40 million over three years through the P&L to create efficiencies, accelerate the digitalization of the function, and consolidate our approach to responsible sourcing. Fiscal year 2020 was year one of this transformation, and we already see the benefits.
Our supply management team was on the front line in the middle of the COVID crisis. They stepped up and secure supply of materials to ensure business continuity and supply of critical protective equipment to keep our people safe. Despite this heavy crisis management activity, we stayed on track on our investment. First, we see real efficiencies. We delivered on last year's ambition. We improved cash management, controlled cost inflation, and delivered the expected cost savings in all areas of spend. The good news is that the payback on this investment is extremely fast. Second, we are accelerating the digitalization of the supply chain, as planned, with the deployment of new solution. Today, I want to focus on the third, our clear responsible sourcing strategy, which is centered around three key pillars and ambitious commitments that truly distinguish Sodexo. The first pillar is health and wellbeing.
That's sourcing the healthiest ingredients in conformity with our high nutritional standards. Social equity is the second one, especially when it comes to our relationship with small and medium enterprises. We are committed to spending EUR 2 billion with SMEs by 2025. The third pillar is to protect and restore natural ecosystems. Our key priority in this area is to engage in a low-carbon supply chain to help deliver our target of cutting emissions by 34% on Scope 1, 2, and 3. To achieve these ambitious commitments, we are taking three line of action. First, we are strengthening our foundation. This is about continuing to ensure food safety and quality through regular audits and testing. It's about ensuring the proper due diligence for human rights and ethics. Close to 96% of our global spend is with contracted suppliers who have signed the Sodexo Supplier Code of Conduct.
Food is not all what we buy. For instance, for uniforms, a high-risk category when it comes to working conditions and quality, we have our own Sodexo team on supplier site to ensure compliance. The second line of action is to go upstream to deliver more value to the business, and we go where the innovation is. Whether we are talking about large supplier or small companies, they both can bring value.
When it comes to local supplier, whether with farmers, bakers, and food producer, as well as plumbers and electricians for our FM services, we spend EUR 1.5 billion this year. It's up from EUR 1.3 billion last year, and we are on track to deliver our EUR 2 billion spend commitment with SMEs. You know it can be difficult for SMEs to enter the supply chain of large organizations. We won't sacrifice our standards when working with smaller companies.
Therefore, as we do in France, we help them through training, coaching, and support to integrate them smoothly. You might have seen we were one of 10 companies recognized by the French government and cited as an example for virtuous and inclusive way we manage our supplier during the COVID crisis. This is some of the value brought by our Partner Inclusion Program. The third line of action is to create accretive partnerships. We face very complex challenges, such as food waste, carbon emissions, animal welfare, human rights, diversity, and we are just a tiny part of a vast supply chain. Many challenges cannot be addressed alone. This is why we partner, whether it's with our suppliers, other companies, or NGOs. Let's take our partnership with WWF as an example.
For a decade, they have helped us work on a range of leading positions on different commodities such as seafood, palm oil, and more recently on deforestation to help us to meet our carbon footprint target. For food waste, we have chosen to partner with several organizations to tackle all aspects of this complex issue. Together with our partners, we are transforming our supply chain and making it a decisive advantage for Sodexo. We want our clients to know that when they sign with Sodexo, aside from getting a competitive offer at the right price, they are also fostering health and wellbeing, social equity, and a lower environmental impact. Embedding much better responsible sourcing in our offer to clients and consumer is why I team up with Bruno, who is going now to tell you more about our marketing and sales roadmap. Over to you, Bruno.
Hello, everyone, thank you, François. I'm pleased to be with you today. Just like François did with supply management over the last two years, we've been investing aggressively in the transformation of our marketing, sales, and retention activities to implement a consistent approach with best-in-class capabilities, keeping our clients' and consumer needs at the heart. First, let me tell you about the world in which we operate pre- and post-COVID. The B2B marketing and sales world has experienced more changes in the last five years than in the previous 25. Living in an increasingly tech-driven world, selling has gone digital and social. The buyer's journey is now a mix of physical and digital touchpoints. Building the right engagement with the right content for the right clients at the right time is essential, and most importantly, with the right services built on actionable insights.
Therefore, we've started to rebuild a broad and omni-channel approach, a mix between the best in-person and digital, using the power of data and technology to build a more interactive and personalized journey for our clients and more relevant services for our consumers. This combination of very relevant digital interaction with the Sodexo human touch is strengthening our go-to-market strategies, enhancing sales effectiveness, and ultimately, really, truly building unique relationships with our clients. Now, what does that mean exactly? Well, over the last two years, we have reset our marketing and sales approach to be more proactive, gaining agility and scalability, and truly leverage our global footprint. How did we do this? We focused on five key actions. First, actionable client and consumer insights at the heart of everything we do.
For example, we launched the Harris Interactive Tracker across eight countries around the world, which allows us on a quarterly basis to have a deep understanding of evolving consumer needs. We've also built through primary research for many of our segments, a formalized understanding of buyers' journeys. Second, we have a consistent marketing strategy across all segments and regions, centered around clear value propositions, delivering strong consumer experiences, building on trends like sustainability and health and wellness. This is improving deployment speed and scalability. Third, we are building a stronger, more concentrated service portfolio. In the last year, we have reduced our portfolio of food offers by nearly 50%. Today, we have 65 internal brands and 35 external brands which are leveraged across all our segments. We're focusing on resources on building robust brands with more impact. Fourth, we're transitioning to an account-based marketing and sales approach.
The concept is simple. Instead of selling everything to everyone, we're focusing on selling our top services to high-value accounts. Instead of going after every RFP, we're going after those that make the most sense. We're going deeper instead of going wider. For instance, in North America, over the last 18 months, we've clearly identified the ideal client profile for each segment, leading to a clear target account list, and we're now proactively engaging with these accounts to boost conversion and upselling. Finally, we're building a more proactive digital and physical engagement with target accounts throughout the sales and contract life cycle. This human-digital balance gives us the ability to better allocate our resources. Using best-in-class technology, we can better rate the buyer intent from a scale from 0- 100, qualify the lead, and determine the ideal way to allocate sales resources.
For instance, a small cleaning contract worth $500,000 in value could be closed with our virtual selling team. For a much larger contract, EUR 35 million, including food and FM services, we would engage the field sales team in the process. This is a much more effective use of our resources. To do this, we've been investing in three key enablers. One, we have deployed in nine months a group-wide CRM across all regions for our on-site services. This is truly the backbone of our sales, marketing, and retention structure, enabling far better tracking of pipeline management, conversion rates, and retention. We've started to reap the benefits. We now have more than 2,500 daily users across the world for whom we organize dozens of regional training sessions, doubling data quality and tripling usage rates in the last 12 months.
We're also complementing our CRM with additional layers of technology, such as marketing automation, predictive analytics, content management, data enrichment, social media intelligence, and overall online tracking. Two, we're expanding our digital marketing and inside sales capabilities with the launch of the marketing and sales distribution centers, what we call our MSDCs, in North America and in Europe. These are regional centers with 20 dedicated digital marketing and inside sales professionals. These are our champions of lead generation and qualification. Each person can reach up to 75 interactions per day. To date, in North America, we've had more than 15,000 virtual interactions with clients and prospects, building an incremental pipeline of more than $200 million in the U.S. alone in a few weeks. In the recent COVID context, these teams were actually already in place to virtually connect with prospects and clients, which was a tremendous competitive advantage.
Three, we're investing in retention. We're revamping Clients for Life, our group-wide retention program, with an enhanced process, new technologies, integration into the CRM for better tracking, as well as the usage of data analytics to gain more insights. Furthermore, we're piloting a new client life cycle management team in North America, regrouping all our client retention experts, building a 360 view of our clients, leveraging, again, technology. This has already started showing promising results. Although all these actions have just been implemented, we've already seen the potential of the approach showcased in Rise with Sodexo, as you will see in this video.
Rising is a process. It starts with that simple first step. As we arise from never-before imagined circumstances, we are all taking the same steps individually and collectively as we venture out to embrace this new normal. We are ready for the challenge, confident that each day will move us forward, no matter where on this planet we call home. Because although we come from different places, we are all in the same moment. Along the way, we'll need some help from the service teams, chefs, technicians, and care workers. Every individual playing a role in helping safeguard our lives and restoring our livelihoods. Helping all of us get back to what we love doing, how we live, learn, work, play, or care. Even though for a while, it'll be a different kind of together.
Wherever you work and whatever you do, Sodexo is ready to help you rise with a thorough and thoughtful approach to creating safe environments and lending a helping hand. From restarting our world safely to protecting people and providing healthy food, life conveniences, wellness, and transforming our spaces. Plus, those touches that will welcome people back to their jobs. We're always there to listen, offer advice, or to just be there for each other. We say rise because it enables businesses, communities, and people to experience the possibilities of a positive new world. When we all rise together, anything is possible. Rise with confidence with Sodexo.
With our new approach, in a matter of few weeks, we were able to develop and launch this transversal program focused on solutions for our clients to get back to business in the COVID environment. This program showcases our absolutely unique competitive position in the market, answering the need for optimal integration of multiple food and FM services.
We use cutting-edge insights from our operations and external partners to understand what was needed and how we could contribute to protect the health and well-being of our employees, clients, and consumers. With the synergies between on-site services, Benefits and Rewards, and personal and home services, we built a truly client and consumer-centric solution to respond to their needs and pain points, unique in the market. The program was also stamped by a medical advisory committee and by the Bureau Veritas label, Rise SAFE. We get to the market quickly by focusing on a target list of prospect and clients enabled by our digital marketing and inside sales teams, which was essential given the restrictions on face-to-face meetings. As you can see with the support of the MSDC, for Corporate Services alone, we held over 15 webinars reaching over 2,000 attendees across 12 countries.
Globally, the Rise with Sodexo digital campaign has led to a 51 share of voice in social media among our competitors' COVID-related programs, and has been the most mentioned across social media sources. The Rise with Sodexo program clearly demonstrates the unmatched value of our service portfolio and its relevance across segments and regions. Over the last two years, we've been setting the foundation to strengthen our go-to-market strategies, build the right services, enhance our sales effectiveness, and drive better retention. We've seen the early signs of progress with more impact expected in the medium to long term. Back to you, Dianne.
Thanks very much, Bruno. Thank you, Sylvia and Fran ç ois. Now let's get started on our next Q&A question session. Dulce, over to you, please.
Thank you, ladies and gentlemen. As a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star and one if you wish to ask a question. Your first question comes from the line of Jarrod Castle from UBS. Your line is open. Please ask your question.
Thank you, and good afternoon, everyone. Just maybe I'll limit it to two, if I may. One, you kind of gave at least a 6%+ margin target. Would you be prepared to give some color in terms of BRS versus on-site in terms of where you could get to and by how much do you think you can close the gap, in terms of best in class in each business? In terms of third-party procurement, you kind of refer to the EUR 20 billion. Where are we at the moment relative to the EUR 20 billion and how much of that number now comes from procurement for your own contracts versus third parties, please?
Thanks, Jarrod, Of course, François will answer to the second question. I will take the first one. Definitely, I think reaching 6%+ margin, as I said, is still a serious target. The question is not whether, but when. What I can say, it's gonna be, of course, a combination of both on-site improving its margins and the GET program is definitely support to this. At this moment, of course, margins of BRS have decreased. They can rebuild progressively. Aurélien will give a little light on this in the next session. I think that on both activities, our target is to progressively restore them and to be very close or at peer level to be progressively be best in class.
Yeah, of course. It's really an objective, and we're working hard on this. On-site, we're working hard on the gross margin as well as on our cost as well. Definitely BRS will leverage the volumes as they come back.
On the EUR 20 billions. To be clear, the breakdown of the EUR 20 billion, we have EUR 6 billion for food and supply, EUR 3 billion to support our FM business, and EUR 11 billion for Entegra. Indeed, the third-party part is very important, and it's an important part of the investment we are making in supply management to really help to develop and support our facility management capabilities.
Next question, please.
Your next question comes from the line of Jaafar Mestari from Exane BNP Paribas. Your line is open to ask your question.
Hi. Good afternoon. It is Jaafar from Exane. I have got two questions if that is okay. Firstly, on the risk assessments on remote work. Can you just help us reconcile -27% reduction in office hours, with the other statement that only less than 10% of your corporate volumes are at risk? Of course, I see that -27% applies only to office, which is only half of corporate. Even with that, it sounds like you are gonna recoup a third of the volume impact through higher spend per customer. Is that correct? What gives you confidence that there is such an increase in spend per customer? Secondly, on medium-term profitability.
If your revenue to EBIT drop-through remains the same at around 20%, then with EUR 300 million cost savings, you could, in theory, deliver your full year 2019 margin, which I calculate something like 8% total reduction in group revenue. That doesn't seem to be what you're expecting. If corporate volume comes down 10%, and the rest is not permanently impaired. Is it right to assume that in full year 2022, you could have a significant net increase in the margins already because you will have delivered those savings? Lastly, on the cost savings, investors will have one or two experiences with cost savings at Sodexo. 2014, 2015, you deliver significant margin improvements, but then we find out that this has impaired the group's ability to grow. More recently, you've delivered on savings, but they have been mostly defensive. They haven't really benefited the bottom line.
On that spectrum, where do we think this new cost savings ends up? What have been the lessons learned from the previous cost savings programs?
Thanks, Jaafar. Let me answer the last two questions, and then Sylvia will answer the first one. Regarding the savings that we are doing, first, as Marc said, half of the GET program is around gross margin, the cost avoidance. It's a protection of our gross margin. It doesn't generate an immediate bottom-line impact. It's more half of it that helps us increase the margins and also mitigate some of the pressure that we can have on the top line and the gross margins. Definitely, our goal is 2021. There's still a lot of uncertainty out there, and it's hard to fully predict. That's why we've given guidance only on the first half. What we all believe is that, as vaccine come, and as vaccination is deployed across our three main markets, we will see things progressively stabilizing, recovering our volumes progressively.
Of course, hopefully from 2022 onwards, our margins improving. In terms of what you said about the cost savings program, the lessons learned are that we had cut costs, particularly very close to the field. One of the reasons that I mentioned at that time, right after the profit warning, was that, particularly in North America, we had cut costs in operations, just above sites. That has been a mistake because we're not controlling and supporting our business anymore. What we do here is, first, it's a sizable impact, but we take the time to do it well. As Marc said, we started at the end of fiscal 2020, and it will last until the end of fiscal 2021. We take time to adjust our structure.
What we do mainly is we sort of reduce the global structures that have costed a lot and not necessarily deliver all the impact that we wanted. We put the resources closer to the field, really streamline the global resources, and I think in doing so, we keep the power, let's say, close to the operations. That makes me more confident that this is a sustainable savings, and that will also sustain the business. Sylvia, on the first one?
Yeah. Thanks, Jaafar. Let me go through the math again. Work from home will only impact food services on office sites. No impact projected on production sites and no impact projected for FM spend. That's the EUR 1.7 billion throughout the group, which is less than 10% of group revenues. The 27% is basically saying, on those sites, probably, the consumers or employees will be there 27% less of the time. It's just a straight mathematical application of 27% onto that EUR 1.7 billion portfolio, which is only office sites and only food services. In fact, there's no recuperation, which is embedded in that 27%. As I've told you, my optimistic thought is that actually we can recoup all of it, but that's optimistic.
Yeah. It's going to be a mix. The mix of services that we will have and the way we deliver our services will evolve, with on-site, with BRS, with more FM. It's the whole mix that will evolve.
Food delivery.
Food delivery, yeah. Mm-hmm.
Thank you for that. Sorry, if that's okay, just to clarify, so - 27% I think is very clear from your presentation what this represents. What I was trying to ask is how do we go from - 27% reduction in office hour in food services, Corporate Services, office type, from this to the other figure, which is minus 10% volume risk, which you are referencing? In the press release this morning, that's minus 10% of total Corporate Services, if I'm correct. What's the bridge there, please?
We believe, but we will check, that the 10% that's referenced this morning is 10% of total group revenues. We'll come back to you in the next few days.
The EUR 500 million that you mentioned, right? The 419 that you mentioned represent 10% of Corporate Services volume.
Okay. It's not the same 10%.
Okay. If it's that 10% that you've referenced to, Jaafar, I think you have to also take into account the portfolio that we have. In Corporate Services, we have a significant part of our business, which is done in manufacturing and that part is not impacted by working from home. If we look at particularly what we do in Latin America, for example, in Italy, in the U.K., we have a much greater proportion in manufacturing and blue collar. This is not impacted by working from home.
Thanks. The takeaway is - 10% doesn't include any mitigation or increase in spend per heads or anything like that?
Yep. No, exactly. 10% is the impact, and we can compensate partly or hopefully fully this impact.
Thank you. That makes sense. Thank you very much.
Your next question comes to the line of Richard Clarke from Bernstein. Your line's open. Please ask your question.
Yes. Good afternoon, everybody, again. Just a quick question on slide 70, that you presented with the different traffic light colors and how we should interpret that going forward. You've got sort of gray bars next to universities and office sites. Are we to conclude that therefore those are not growth targets going forward and growth should really be more in healthcare, a bit in sports production sites, and the BRS business? Just on the point that you can recoup some of the working from home revenues, I'm just wondering what the evidence is to date on that higher take-up for those that are in the office. Is that happening through the pandemic, or is that more of a hope looking beyond it?
On the traffic lights, definitely we believe that universities and office space in corporations are still very interesting areas that we will explore, that we'll continue to develop. There is still a big question in the next two years on how universities will deal with the pandemic. As I said, until vaccine are there and vaccination is redeployed. As you know, the enrollment is decreasing in the U.S. and you all know that the vast majority, the totality of our business is in universities in the U.S. Still a lot of question mark moving forward. Once the pandemic is over, we will have to look at how universities adapt to a new normal. Will online remain and to what extent? What will be the proportion between boarders and commuters, students? There's still uncertainty there.
We believe still that it's a profitable segment where we have a lot to bring. We know that students from also our surveys, they are willing to have nice dining options. They want to have a campus life, and dining is part of the campus life. We still believe that it's an interesting area segment to develop. Of course, office, and it's back to what Sylvia was saying. In offices, definitely, we will continue in Corporate Services to be very relevant. The workplace is critical for our clients. Life at the workplace is critical, and food services are an important part of the workplace life. It's a place where people gather, people exchange, and of course, we'll get back to a new normal after vaccination.
As far as the evidence of higher take-up, I think I would leave this question to the next session because Sunil will give you some light on this in the next session, I think.
How should we interpret the traffic lights then? Is this sort of a medium-term outlook the next couple of years after containment rather than a longer-term outlook?
Absolutely. That is how you should interpret it.
Okay, thanks very much.
Terrific. That's the end of the Q&A session and the first half of our agenda. Now we'll have a 15-minute break. During the break, we're going to be playing a video on our love of food, and it showcases our exceptional capabilities, and it will make you hungry. A second video on the importance of preventing food waste. Both these topics are key to what we do and how we do it. After the break, you'll hear from some of the trends we just looked at and how they're translating into our business. Get up, stretch, grab something to drink or eat, and check out the videos. We'll be back in 15 minutes.
What a year it's been. One of incredible highs and shocking change. It's been a year where we learned so much, tried new things, and relied on each other.
We are together.
Through it all, we held tight to our values, reached out, lent a hand, gave of ourselves to make someone else's life better.
We are
Together. We were there, serving our guests, keeping them safe, bringing them joy, and easing their minds. We are together. Even without our kitchens, we helped those in need, offering dignity, caring for those who need it most, giving love of food its highest meaning. We're together.
We are together.
Rather than sitting and waiting, riding it out and hoping for the best, we looked to the end of the tunnel and saw what would be needed in the new world to come.
We're together.
We didn't say, "It can't be done." We said, "How can we do it?" We worked it out and did it together. We are together.
We are together.
We never lost our passion, our drive, our need to serve. No matter what, we kept going.
We are together.
We're putting the past behind us, nose to the grindstone, yet heads held high, making plans, moving forward.
We are together.
Now, it's a new day, one built upon what we know and our determination to accelerate and come back stronger than ever.
We are together.
We're pulling ourselves up. It's our greatest challenge to date, but we know we'll do it because we love what we do.
We are together.
We are together.
Today, we say, "What's next?" What a year it's been. One of incredible highs and shocking change. It's been a year where we learned so much, tried new things, and relied on each other.
We are together.
Through it all, we held tight to our values, reached out, lent a hand, gave of ourselves to make someone else's life better.
We are.
Together. We were there, serving our guests, keeping them safe, bringing them joy, and easing their minds. We are together. Even without our kitchens, we helped those in need, offering dignity, caring for those who need it most, giving love of food its highest meaning. We're together.
We are together.
Rather than sitting and waiting, riding it out and hoping for the best, we looked to the end of the tunnel and saw what would be needed in the new world to come.
We're together.
We didn't say it can't be done. We said, "How can we do it?" We worked it out and did it together. We are together. We are together. We never lost our passion, our drive, our need to serve. No matter what, we kept going. We are together. We're putting the past behind us, nose to the grindstone, yet heads held high, making plans, moving forward.
We are together.
Now, it's a new day, one built upon what we know and our determination to accelerate and come back stronger than ever. We are together. We're pulling ourselves up. It's our greatest challenge to date. We know we'll do it because we love what we do. We are together.
We are together.
Today, we say, what's next? What a year it's been. One of incredible highs and shocking change. It's been a year where we learned so much, tried new things, and relied on each other.
We are together.
Through it all, we held tight to our values, reached out, lent a hand, gave of ourselves to make someone else's life better. We are together. We were there, serving our guests, keeping them safe, bringing them joy, and easing their minds. We are together. Even without our kitchens, we helped those in need, offering dignity, caring for those who needed it most, giving love of food its highest meaning.
We are together.
We are together. Rather than sitting and waiting, riding it out and hoping for the best, we looked to the end of the tunnel and saw what would be needed in the new world to come.
We're together.
We didn't say it can't be done. We said, "How can we do it?" We worked it out and did it together. We are together. We are together. We never lost our passion, our drive, our need to serve. No matter what, we kept going. We are together.
Listen to the oil crackling, the timer ticking, the cutlery clinking, the blade chopping. Touch each fruit, vegetable, herb, the hot, the cold, the ice, the texture. Smell the spice, the zest, sweet, spicy hot, the baking, an aroma. Taste the seasonings, the cooking, the garnishes, the balance, the finesse, and the flavor. Look at the wasted food, all that's not used, every leftover, every scrap. Together, we can stop food waste. Let's open our eyes and act. Food waste doesn't make sense. Join the movement. Listen to the oil crackling, the timer ticking, the cutlery clinking, the blade chopping. Touch each fruit, vegetable, herb, the hot, the cold, the ice, the texture. Smell the spice, the zest, sweet, spicy hot, the baking, an aroma. Taste the seasonings, the cooking, the garnishes, the balance, the finesse, and the flavor.
Look at the wasted food, all that's not used, every leftover, every scrap. Together, we can stop food waste. Let's open our eyes and act. Food waste doesn't make sense. Join the movement.
Welcome back, everyone. I hope you had a chance to move around a little, as well as take in the videos. As we begin this next part of the agenda, we'll hear from three of our group Comex members. First, Sunil Nayak, our Corporate Services CEO Worldwide, Sunil will present on some of the opportunities that lie ahead for our Corporate Services segment. Aurélien Sonet, our CEO Benefits and Rewards Services Worldwide, will share what's new in his activity, as well as the synergies with onsite services. They'll be joined by Sarosh Mistry, our Region Chair for North America. He'll tell us more about how Sodexo plans to grow in the important North American market over the next few years. Immediately following their remarks, we'll have another Q&A. Let's get going. Sunil, over to you to start us off.
Thank you, Dianne. Hello, everyone. I'm happy to be with all of you today. Before I start, let me remind you that Corporate Services represents 26% of our global revenue, providing food and FM services to local, regional, and global companies and their employees around the world. Since Sodexo's foundation over 50 years ago, our mission has been to improve the quality of life of our people and those we serve. This has really driven our strategy. We have diversified our services from food to FM, rebalanced our client mix between global and local, and invested in emerging markets. Today, our global study accounts contribute 26% of our revenue. FM services have grown significantly and contribute 40% of the mix. We've had really good success in emerging markets, which now represent 30% of our business volume in Corporate Services.
This portfolio mix has been a key element for us to serve our clients, but more importantly, as Denis said, has helped us remain relatively resilient during the crisis. In fact, looking at the trends the crisis has thrown open, we believe our portfolio is really well prepared to support a faster recovery for us in the future. We know that the market is still worth over EUR 350 billion, even though our revenues were impacted this year. The top five players only contribute to 7% of the market, and it is still very fragmented with local and single service providers. This market is shifting following some really key trends. Sylvia has gone into the details, I am only going to highlight those that are particularly significant to our business segment. The first trend is flexibility.
It's not only about work from home, because flexibility is driving the need to optimize spaces, offices, and restaurants, and of course, reduce costs. Simultaneously, and that's important, leaders and HR professionals are trying to find ways to keep employees engaged and strengthen the culture and DNA of their organization. After COVID, they are looking to provide best-in-class services, both at their workplace and for employees working from home. This is driving the growth of the market towards outsourcing, integration of services, and a big focus on employee services. Armed with a really resilient portfolio in a hugely fragmented market, I do believe we are best positioned to leverage the opportunities that have emerged. We expect to get back to around 6% CAGR post-COVID. Let me talk you through our strategy on how we're going to achieve this.
We know food contributes 60% of our revenue, and as you've seen earlier, we expect a 20% impact from work from home on our office food portfolio over the long term. 10% of our Corporate Services total revenues. Our plan is first to recover this. We need to recover it, but then also grow in this big market. The first step of recovery is to reduce our cost of delivery. We're doing this by supplying more of our food from central kitchens, cloud kitchens, and commissaries. We have around 200 offsite production units around the world. This will help us enhance our margin on food through a commercial model that requires less labor on site and more of food delivery. The second step is to increase the share of wallet and create more touch points with consumers.
By digitalizing our services with pre-order, prepaid, COVID safety pickup, we have already seen an increase in spend and participation between 5%-10%. We have a great example in China, where we partnered with Meican to offer a digital platform allowing customers the flexibility to choose best-in-class food brands in or outside their workplace. Likewise in France, our proprietary digital platform, So Happy, is used daily by 250,000 consumers, with numbers growing rapidly. We have similar partnerships underway with technology platform companies in other parts of the world. Moreover, let's not forget, digital pre-order and prepay systems generate less food waste, and that's completely in line with our Better Tomorrow goals. We want to grow. We want to grow by winning new customer and new markets, like sites without kitchen.
To do this, we have invested and are partnering with local boutique companies who have commissaries, like Alchemista in the U.S. and FoodChéri in France, to modernize corporate dining and bring high quality and healthy menus that are locally sourced. Finally, a big opportunity lies in the complementary of activities with BRS as employees work from home. Clients want to give benefits to their employees on food and other services. In the last few weeks, we've secured contracts in France providing meal cards to employees who can use them either when they're working from home or in the Sodexo restaurant when in the office. This demand is growing fast, and our key clients see the value in the integration of systems, providing a seamless solution. For example, for our client, ODDO BHF, we are providing access to the entire catering offer.
They can have lunch at the office or have it delivered with an omni-channel payment option, either with a restaurant pass card, the company badge, mobile payment, or credit card. In addition, information is provided to the kitchens regarding days off and home working, really helping to reduce waste. This integrated seamless solution is a unique offer we can provide. Back to our strategy. Unlike the food business, FM, and especially workplace, are pure growth place for us. Today, 40% of our revenues come from FM services, and this will continue to grow through local, regional, and global contracts as companies integrate their services, including food. The IFM market is expected to grow to be at 15% by 2025. In the U.S., there's a large opportunity in first generation outsourcing. We do believe it's gonna be a busy market.
We've had really good growth in the past, and we want to accelerate this. We're doing three key things. First, we're launching Vital Spaces, an integrated service offer that shifts the conversation from FM to broader workplace solutions. This offer helps our clients better engage their employees and optimize costs by providing an ecosystem of services like workplace design, workspace management, and work-life services for their employees. Second, we're expanding Wx, our own startup, to provide specialized consulting services on workplaces as clients rethink the design and the use of their spaces. This is also part of our Vital Spaces offer, and it is a great entry point for integrated FM development. Lastly, we need to improve client and customer stickiness to enhance and seamless workplace experience and continue to drive efficiency using data.
We have successfully launched our Wando digital platform at 400 sites. We want to expand this with new and existing clients. One app for all services, really driving customer engagement and experience. Moreover, these comprehensive, more complex offers will also increase stickiness, and therefore retention in our business. Before I finish, I just want to add to what Denis said earlier about sustainability. We have a role to play other than in food, as 30%-40% of energy consumption is generated from buildings. For example, with one of our strategic accounts where we provide FM services, we were able to generate savings for the client, giving them a payback within two years, and support them in reducing their carbon footprint. This is very important for the client and as important for us. To summarize, we began with food. Food will always be core to our business model.
Quality of life is our ambition. To grow in this market, we not only need to reinvent our food business, but also expand our FM services into the workplace, always keeping people and care at the center of everything we do. Let me now hand over to Aurélien, who will explain what we are doing in benefits and rewards business.
Thank you, Sunil, and hello, everyone. My objective today is to explain how we fully transform Benefits and Rewards Services over the past three years into a digital business. This has allowed us to ensure business continuity with our client, but also it prepared us for growth and new opportunities going forward. Our goal for the next three years is to reinforce our leadership position as number one or two in each of our employee benefits market. Before I go into the detail, let me set all this into context. Our BRS activity, and particularly our employee benefits core business that represent 80% of our total revenue, has shown good resilience through the crisis, even if we were impacted mainly because of temporary unemployment.
Over the last quarter, our business volume growth showed a very good recovery to reach -4%, we saw an encouraging positive trend in September. This resilience can be explained by three main reasons. First, our clients want and need our product. They have continued to offer benefits to their employees wherever they work. Benefits like meal or food cards are no longer considered discretionary expenses, more a way to address critical basic needs in addition to being tax efficient. Today, this is a must-have for organization as well as for public authorities who have used them for COVID-19 related social programs. Secondly, we are benefiting from our wide geographical spread. Across the 34 countries in which we operate, the situations differ, governments have been taking multiple COVID measures that impact our clients and merchants differently. That allows us to better mitigate the consequences of the crisis.
Certainly, our digital transformation helped us to quickly adapt our products to the COVID crisis. All these recent events have confirmed and accelerated the trends on which our transformation strategy and our products were funded. How did we transform our business, creating the platform for future growth? First, after a slightly slower start, we fully embrace the digitization alongside best-in-class providers. I'm very pleased to share that we are now 86% digital, compared to 73% two years ago. This fast move is much more than a response to a market trend. It's also about entering a new era of opportunities to develop new products, as well as modernizing preexisting ones. Over the past few years, we invested up to 9% of our revenues in technology and data to digitize our consumer's journey, and therefore, to provide them a seamless customer experience.
For that, we developed our own mobile payment, our own contactless payment, and app-to-app payment solution, which have now already been deployed in 24 countries. We entered into a strategic partnership with Zeta, a leading and digital native payment platform. Working with Zeta has enabled us to develop a unique digital and scalable platform that strongly improves the robustness and the user centricity of our products. We have also invested to capitalize on the data we have from serving 36 million consumers daily with over one billion digital transaction per year. Data is also key to track and measure our performance in real time, allowing us to be more predictive in our analysis and faster in our decision-making. Thanks to all these digital assets, we are reducing our time to market and improving our product scalability.
For instance, from the first success in India, we've just launched a multi-benefits product in Brazil with a promising start. Already 100 contracts signed in the first month, and we are about to roll it out in three other markets. Beyond technology, we have enriched the quality of our products to deliver personalized employee experience at work and beyond. Taking advantage of the digital ecosystem that we built, we have already integrated over 70 partnership with e-commerce stores and meal and grocery delivery platform. We saw a 30% increase in deliveries since July, and every day, more than 120,000 deliveries are done through these partners. Our consumers are asking for more choice, which we can address with our new digital products, like the multi-benefit platforms that I mentioned earlier. These kinds of products provide the client with more flexibility to adapt to different work situation.
Could be at home or at the office. On this work from home topic, by leveraging our existing digital products, we were able to quickly respond to our on-site services client looking for a meal solution for their employees, who in the same week would work in different places. As Sunil mentioned, we already have some concrete successes with some first contract signed. Last but not least, we have also been investing in our people. Switching to a digital company means that we had to accompany our team along this journey with training on agile method as well as onboarding new talents. It's a major shift in our way of thinking and in our way of working, and today our team is ready to drive it. Thanks to this achievement, and despite the lack of visibility, we remain ambitious.
Our goal is to reinforce our market share by focusing on three key levers. First, our client retention, with a target to reach 95% in fiscal year 2021 versus 94% in fiscal year 2020. We know that the pandemic is likely to cause the market to contract. We know we need to stay very close to our half a million client, large and small. We are obsessed with the user experience, challenging ourselves to identify and progressively solve for client and consumer pain points through innovation and data. Because our products are relying on our digital platform that is scalable by design, we are cost-effective and we can keep a competitive price. Secondly, our ability to win new clients remain critical. We are continuing to grow our share of SMEs.
In spite of the current crisis, we have opportunities and leads still coming in every day, and thanks to our digital marketing investments. We are moving fast on our joint on-site and BRS solutions. As Sylvia mentioned, this work from home joint offers are a real differentiator and a future source of growth for Sodexo. Our third lever is around delivering extra value for our 1.3 million merchant partner, who play a key role in our ecosystem. In this time where the smallest ones, mainly restaurants, are seriously hit by the crisis, we want to stand by their side and to support them. That's why we have several initiatives to reduce their cost, such as the use of the QR code payment, and to increase their revenues via our digital platform. What is the outlook?
Our total employee benefits market, estimated at approximately EUR 430 billion pre-COVID, will remain significant. Being the number one player in 17 of our markets, we know that there is a good demand for our products and that we are well-placed to meet the flexible working format. We believe the opportunities lie in increasing our market penetration and offering innovative, flexible, and user-centric solution. To secure and grow our position, we'll continue to invest in OPEX and in CapEx in technology this year at around 20% of the revenue. We are also reviewing our priorities, improving our efficiency and optimizing our cost to help going back to a pre-COVID level margin. In conclusion, I would say that we are ready with the right combination of state-of-the-art technology, talent, and agile mindset to make the most of our product and market opportunities.
We expect to get back to run rate growth of 5%-10% in revenues and double-digit in operating profit once the crisis is over. Thank you. I now hand over to Sarosh.
Thank you, Aurélien. Hello, everyone. I'd like to take some time today to talk about how we have managed the challenges of the last few months, and more importantly, how we intend to grow moving forward. First, for some context. Since the last Capital Markets Day, as Denis said, we have been laser focused on execution, reasserting discipline in terms of processes and contract signing, and putting in place STEP. Client retention improved 230 points in FY 2020. We have significantly changed the regional leadership team and are investing in our digital commercial capabilities. Lastly, we have managed to resolve the issues in larger loss-making contracts, either by turning them around or, as a last resort, exiting them, particularly in education. Leading into March of this year, we were confident that this work would start to show in the numbers, and then COVID hit.
While COVID has obviously taken a toll on our revenues and profits, we believe that our strategic choices of the last few years and our actions, specifically in the last several months, have helped us weather the storm with resilience. Also aiding our strength during the crisis is our diverse mix of clients. It's important to note that in North America, corporate services makes up just 14% of our revenues. Within this, more than 44% is FM and 50% of our clients' employees are blue-collar, a group that was called to work throughout the crisis. The work-from-home trend and any contraction in corporate real estate is not a make-or-break issue. In fact, for Sodexo, it's more of an opportunity to explore.
During the pandemic, we mobilized experts, provided flexibility to our supply chain across the region to respond to our clients in record time. We managed our financials extremely well. We paused our CapEx, we acted quickly on staffing, and significantly protected our cash. Coming out of the crisis, we have the resources necessary to ramp up efficiently and make strategic investments. Where do we go from here? While retention will always be top of mind, our focus over the next few years must be on growth. We have all the right tools to deliver against this. Interestingly, Sunil already mentioned two of the pieces that will drive this growth, not just for Corporate Services, but for the North America region. Namely, new food models and a modernized approach to facilities management.
Focusing on our food model first, we are developing our existing convenience offers, specifically around pantry services and micro markets, giving consumers on-site a flexible, simple, and always ready food solution. This approach also allows us to bring consumers local, natural, and high-end brands. This is a massive addressable market, which is growing very fast. To deliver it, we are leveraging our existing client base and finalizing the recruitment of key talent. Second, we are upgrading our production capabilities with off-site production through commissaries and ghost kitchens. This improves productivity and increases capacity. Generally speaking, a 250 sq ft ghost kitchen can produce up to 1,200 different meals per day, compared to just a few hundred in a more rigid on-site model. By improving the flexibility of production, it also allows us to produce shorter runs, tailor-made to individual consumer needs.
We are taking a targeted regional approach to building out this capability. We have the potential to very quickly stand up a national network in 22 of the top 25 markets in the U.S. Finally, digital consumer interfaces for ordering and payment allows us to maximize our full range of capabilities to serve consumers exactly when and where they need to be served, on-site, at their desks, or at home. We are building stronger platforms for this. I'm proud to say that we are applying that same energy to evolving our work in facilities management as we are to transforming our approach to food. The facilities management space was 27% of Sodexo North America revenue in FY 2020. This is an enormous addressable market, estimated at more than EUR 24 billion in corporate services, education, and healthcare alone.
With only 30% of hard FM outsourced in the U.S., we can continue to grow at a pace by targeting the most profitable parts of this market in terms of clients and services. We're in the process of redesigning our FM go-to-market approach in corporate services and healthcare to leverage technology like IoT, robotics, and analytics. We're building FM talent through technical school alliances and specialized training initiatives. As you heard from François, we're making our supplier strategy more agile, and we are raising our sustainability standards, for instance, in energy management in support of shifting client priorities. In summary, we know that North America is the most important market in the world by its size, its opportunity, and its trendsetting. At our last Capital Markets Day, we shared our plans to return to growth. The pandemic hit, and clearly it took a short-term toll on our business.
It also validated our existing top priorities. As a result, we will be stronger for it. Yes, we have work to do, but we are poised to move North America to the next level. Before I turn it over to Q&A, I would just like to show you a video from one of our new clients in Florida, which really made me proud of our teams in North America. Thank you.
Welcome to The Nest.
Simply amazing.
Sandwiches look awesome.
I am amazed, absolutely amazed.
It's fabulous. First class.
It's wonderful. Trust me.
It is great. This is incredible. Worth the wait. Wow. It's really cool.
Looking good.
It's like I died and went to I can't even call this the cafeteria. It's a fine dine heaven.
I just keep looking up at the ceiling. I can't imagine the detail. This place is like a cruise ship.
It's great. It's a beautiful place. We got a lot of options, and I really like it. I'm gonna try something now, and I'll let you know how it is later.
They got ramen bowls.
I got this spicy ramen noodle bowl with shrimp. It looks fantastic.
Ooh-la-la.
I am trying the brick oven pizza, and I figure I'll try something new every day.
We're at the entree. We have the Mexican bowl right in front of you. We have pork, chicken, beef.
I'm very impressed, and I got the Mexican bowl.
I got an Impossible Burger. It is a vegan burger
That's a smashed burger with sweet potato. Can't wait to try it.
I got the grilled chicken sandwich. It's awesome.
That's a hamburger there.
Everything has gone excellent so far. Everybody's excited to be here. We've been watching this building go up for the last three years, and today's finally here. We couldn't be happier.
Amazing. This is gonna be spectacular. You can order lunch before you get here, which is gonna be even better, and you can pick your time. I'm looking forward to that. Everything looks beautiful.
This is our exciting new grill station, one of the two stations where you can place your mobile orders ahead of time from your desk. You can skip the lines, grab your food. Food's already prepaid for you. You don't have to pay in the checkout line. It's custom made to order.
It's the same as the point of sale with the self-check. You pay with the Byte app. The Byte app is actually the fastest form of payment on there. It'll take all forms of credit, Apple Pay, Google Pay, Samsung, regular credit cards.
Awesome space. I think this will be the hub for associates to eat and meet and work.
You're just gonna be overwhelmed. I mean, just the building is beautiful. It's bright. There's something for everybody in here.
I think this is spectacular. It's beautiful, and there's so many options to eat. We love it.
It is lovely. It's large and open and spacious and filled with light, and everybody's smiling. Wow. Like, what else can you say?
Tomorrow, I gotta come back and get a pizza or a calzone.
Please come here. It's awesome. A lot of diversity. You're gonna love it.
Thanks very much. What a great video. Thank you, Sunil, Aurélien, and Sarosh. Now I'd like to open things up once again for a Q&A with our audience. Dulce, over to you.
Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star and one if you wish to ask a question. Your first question comes from the line of Jamie Rollo from Morgan Stanley. Your line's open. Please ask your question.
Yeah, thank you. A few questions, please. First, just on BRS. In markets where they've got the employee benefits model, what is your client overlap between BRS and OSS, please? Whether by part numbers or by revenues between the two businesses. And how has that overlap changed over time? Secondly, could you please give us a feeling for what the size of the delivery part of BRS is at the moment, please? Finally, on North America corporate services or even North America OSS, could you just scale for us the sort of vending and micro markets opportunity, please, and what your share of revenue is at the moment coming from those verticals? Thank you.
Thank you, Jamie. I propose that Aurélien answers the first two ones. I think, Sunil and Sarosh, you can manage the third one, I guess. Aurélien?
Yeah, sure. Look, regarding the, you know, the number of clients that we are sharing with Onsite, there is just a few so far. There is, I mean, the room for potential is significant. Even though BRS is managing a lot of large client, still it remains, you know, a small portion. What we plan, you know, to see over the next few months, few years is to increase our portion of large account coming from Onsite clients. That will be shared with Onsite services. You're right.
Regarding the size of delivery part of for BRS, actually, I was sharing with you that we clearly, since, you know, we developed our partnerships with many of those players, could be global, regional, or local, and since the COVID crisis, the beginning of the COVID crisis, we've seen a quite significant increase in the usage of this platform. Still, it represents only 3% of our total transaction. It remains not so significant, but the trend is there, and the market demand is there, and we are definitely happy to answer this demand.
Well-positioned.
Well-positioned. Yeah, absolutely.
Sunil and Sarosh, on the scale of the vending market you're on?
Yeah. I'll talk about corporate services first. First of all, I think the good part is that we're in many client sites, and we're seeing our clients shift in the way they're actually consuming food. They're moving also part of their business from onsite to micro kitchens, vending. We, you know, have a huge potential in this market, and that's what I shared and explained to you as part of our strategy. Our presence is still smaller, and I think we can go a lot more with our existing client, and that's really baked into our recovery plan, going forward in our business. The opportunity is larger, and the good part is we have a big client base. Sarosh, I don't know if you wanna add to that.
Thank you, Sunil. The market within North America for vending, micro markets is a huge opportunity. It's a EUR 26 billion addressable market. At present, we have around 1% of the market share. As the needs of our clients are changing, more and more clients are looking for these services. At the end of the day, we wanna be that trusted advisor to our client and be there for them. We are scaling up on these services to be able to grow with them.
Thank you.
Your next question comes from the line of Johanna Jourdain from ODDO. Your line's open. Please ask your question.
Yes, good afternoon. Two questions, on BRS as well from me. The first one is regarding the CapEx. You had net CapEx of more than 9% in 2020. That's a strong acceleration versus last year. How should we think about your investment strategy in this division in the coming years in terms of CapEx? What does the 20% of revenue invested in tech refers to? My second question, still in BRS, so which technology do you need or miss at the moment? Could it come with targeted acquisition, or would you rather favor CapEx? Thank you.
Maybe in regarding this acceleration, yes. As I mentioned, to complete our digital transformation, we have accelerated our level of investment, moving from 5% three years ago to this 9%. We have invested. The 20% refers to the OpEx plus the CapEx. Definitely we're investing this money not only to build up our payment solutions that I mentioned, but also to develop our digital platform, from the front-end solution to the back office. We are also building our data platform, and of course, we also need to invest in cybersecurity. It refers to all these topics. The third question was about?
In terms of, do we have the technology that we need, or do we need to acquire some more or put CapEx?
Look, what we know is that our model, moving to digital is more CapEx-intensive. The partnerships that we set up with a company like Zeta, which is a payment platform technology, does help us to continue on this front without increasing more our need of both CapEx and OpEx in percentage of our revenue. We have solid foundation, but definitely we need those technology. You need to upgrade it.
Constantly.
All along. Right. Constantly. It's a new model, it's a new life in which we are living in. Definitely, we are well adapted to continue on this front.
I must say that the speed at which we've been able to leverage the platform, we invested a lot in securing the platform, in India at the beginning. The speed at which we've been able to transfer the platform and operate the platform in Brazil and now in several countries in Europe, has been really impressive.
Thank you. Maybe just a follow-on, regarding the 20% of revenue that needs to be invested in tech. How long do you think you will need to have this kind of target? How should we think about the margin improvement, going forward? Thank you.
Look, we are part somehow of the GET plan. We are currently running our cost-reduction plan. To do this, we had to review our priorities, taking into account the impact from the COVID crisis. Nonetheless, we want to maintain the investment that we are doing, both in tech and in marketing. It's really, we are finding pocket of efficiencies and cost optimization so that we are in a position to reinvest in tech and in marketing as well.
I must compliment, to say that pre-COVID, BRS was investing that type of amounts in the last two years, and we sustained very high margins. Definitely, of course, COVID has hit our margins, but as we look forward and look at post-COVID, we can recover the sort of order of scale of margin that we had, and continue to invest. That's what we had pre-COVID.
Thank you.
Your next question comes from the line of Leo Carrington from Credit Suisse Europe. You may ask your question.
Thank you. Firstly, could I just ask a follow-up on BRS and digitalization? How much margin accretion would you say you've seen from digitalization so far? Is the bulk done, or is there more to flow through as you optimize this? Is there more to flow through as you convert the 14% paper business that's left, to give further tailwinds? Secondly, on a separate topic, corporate services. With delivery, how do you interpret the recent launches of the business-to-business delivery offerings from the food delivery players, who seem to specifically try to be tackling the business lunch market?
As a follow-on, in terms of the delivery economics, when delivery does form part of your offering, would you be willing to offer this where you have a P&L contract, or do you see it as more a kind of part of an employee benefit, perhaps part of a cost-plus contract?
I suggest that, Aurélien, you take the first one, and Sunil, you take the other two.
For BRS, what we noticed is that the digitization of our business has a negative impact on our gross profit till we reach 75% of our volume in a specific market. Actually, in many markets, we've gone above the 75%. We are already getting some positive return from this digitization. Where you're right is that when we get rid of paper, when we'll be 100% digital, yes, of course, the gross profit will be improved. Yeah.
Sunil?
First of all, just from a delivery perspective, the cost of delivery companies struggle is because the cost of marketing and the cost of logistics is really high. For us, we are in a confined environment with our clients and their employees. Our objective is to capture as many consumption points as the consumer may have, either through eating in the restaurant, eating in a cafe, eating in a micro-kitchen, eating through a vending machine, or now, getting food delivered to the office. Through couple of things, we're actually capturing the revenue. First, through digitalization, because when you digitalize your food service, you give that option to that customer, and he or she can order food delivery, and we have an ecosystem of partners which we work with, who can bring that food and bring it to our clients' sites.
In many cases, now we've got these really nice lockers where the food, when it gets delivered, is delivered in a very organized manner in lockers through a digital platform, which they can use to pick up and the consumer can use to pick up. We're actually expanding more and more consumer points, using and leveraging the understanding of our clients and the strong understanding of the employees on our clients' premises. Of course, we want to extend it to all kinds of contracts because there's a big opportunity in that.
Yeah. We own those clients. It's by being proactive. I think the whole name of the game is to interact with our client and our consumers, understand what is the actual need of the consumers, how the consumer behavior shifts, what is the policy of the client with regards to, again, working from home and what the client wants to happen in the workplace. It's that dialogue that helps us to create stickiness. As we bring those different channels, we increase the stickiness. We partner with those delivery players that can come to B2B. They are more tuned to, at the moment, really addressing the B2C market. We can be a channel for them, but we own the client relationship, and that's what's very important.
In terms of model, because you asked about the P&L, it can work for a cost-plus contract as it can work for a P&L contract. I think we should take the last question before we move to the next part.
Your next question comes to the line of Jarrod Castle from UBS. Your line is open. Please ask your question.
Three from me, if you're short for time, you can leave it to two. You've spoken about digital delivery competition from similar catering companies and FM providers. Can you give any comments in terms of the more convenience providers, i.e., your clients step out the door? Are you seeing less competition or a number of them going bankrupt? Any comments on how you see that competition developing? You also mentioned that 2/3 of your top management's being renewed. Are all the changes now done, how have you gone about trying to maintain the culture with such a big change? Just lastly, this might be a quick one. Where do you see the outsource trend now in the North American market? Do you expect, kind of on a more normalized basis, an acceleration in that trend or a stabilization now? Thanks.
Yeah. Thanks, Jarrod. I'll take the second one. I'll ask Sunil to take the first one. Sarosh to take the third one. In terms of management changes, indeed, we did, in North America, quite an important change. Also renewed the Executive Committee. The Executive Committee is overall stable. Of course, there can be some changes. I have a solid team. In North America, we've really, I think, upgraded the team. We are in a good shape. Sodexo has a strong culture, and has always had a strong culture and a strong DNA and very strong values. We take great care first in people that we recruit, in how we integrate them. There's a strong induction program. We take the time to integrate our leaders, that they really get the culture.
We also, of course, that management revamp has also been powered by internal promotion. It's also very strongly in our DNA. Of course, when you raise people and grow them and promote them in the company, it keeps the culture together. On the first question.
The first question on convenience. Absolutely, on convenience. First of all, just to remind, our business is mixed between manufacturing, R&D, and offices. The convenience, really, competition, as you call it, would typically be more around the offices and less around manufacturing and R&D. Within the office environment, we've been modernizing, and Bruno talked about it a little bit earlier. We've been modernizing our food offers and really making it high street retail, changing the format, really going to market and modernizing the food all the time. I think that's a big shift we are making in the way we are actually delivering the food. The second big advantage is through digitalization. As we digitalize our services and our food, we know our consumers better. We have better understanding of what they like. We know better what they want to buy.
This allows us the flexibility and agility to quickly change our food menus, our food offers, and capture the consumers as they eat on the premises. In the short term, we've seen that the teams would prefer to be at their workplace than getting exposed to external environment. The clients also like that, just from a safety perspective. In the long run, will that stay or not stay? We'll have to see. We're adjusting, really, the way we deliver and serve our food.
There is consolidation to be done in convenience, definitely. It's a very fragmented market, and we'll be moving on this. Sarosh, on the outsourcing?
Sure. Thank you, Denis. Well, let me start by reiterating what I shared with you earlier. NORAM is the largest market for us and the most important market, not only from a size standpoint, but also from an opportunity standpoint. We look at what's happening presently as an opportunity. As I'd mentioned earlier, just when you look at vending, micro markets, et cetera, that market is growing double digit and triple digit. Presently, we have 1% of the market share. There's tremendous opportunity to grow in that market, and more and more clients are asking for that service. Now, when you look at FM also, as I mentioned, FM in corporate services, healthcare, and education is only 30% outsourced. We feel that we have the opportunity to grow as the outsourcing market continues to grow and pick the clients that we want to partner with.
We truly believe our future is bright.
Yep. Thank you very much.
Terrific. Well, thank you very much for that frank exchange. Certainly some great questions, as always. As we move to the last part of our agenda, I'm pleased to pass the floor one last time to Denis so he can provide some final perspectives and wrap up for the day. Denis, over to you.
Thank you. Thank you, Dianne. Thanks again to Aurélien, Sunil, and Sarosh. We're now coming to the end of our virtual Investor Day. A few final words before our final Q&A session with Marc. I want to thank you for hearing us this far and for your engaging and thoughtful questions throughout today. We enjoy your perspective and your challenge and value that you take the time out of your week to allow a broader team of Sodexo leaders to share their insights with you. It means you get to see and test the courage of the women and men who run things at Sodexo and understand their ambitions. We started our journey today on a wave, opening ourselves to you on how we are surfing through the tough times and getting our whole operations geared towards generating the growth that we are aiming for.
We shared where we are in this transformation journey, what commitments we made, and continue to make to take Sodexo safely to good port. If I had to sum up everything that you heard today, I'd like to make the following three points. First, Sodexo is resilient. Our company is really a solid part of the services landscape globally and has really fantastic opportunities to occupy the space, invest, and grow into developing areas and stay at the forefront of our industry. We told you about how our clients increasingly need and want integration of services. Our integrated business model, which is at the heart of our DNA, is a fundamental engine for growth. Number two, our company is currently in the throes of a profound transformation, a transformation led by how our clients and consumers choose to live their lives and the trends that emerge from those choices.
Our transformation is on two levels. Transformation from the past and addressing our legacy issues. We all know about the deep executional issues that we've had, and you've heard today what we've done about this. You know that once the turn is made, we have the scale, the strategy, and the people to thrive. More exciting, our company is in the throes of a profound transformation towards the future, completely digitized, client-centric, consumer-centric, focused, disciplined, agile. Despite our global footprint, Sodexo is a constellation of caring, smart, and skilled people, bringing quality of life to clients and places across society. Hopefully, you got a strong message today through our words, but also through the people who carry those words. That our executive committee is renewed and reinvigorated with setting the business and future-looking.
Together with all our teams, we are working with one single overarching goal, to reignite sustainable growth. Aside from resilience and positive transformation, the third strong message we wanted to leave you with is this one. The results and the financial muscle are there. You can't yet see the translation into figures because of the massive COVID pandemic setback. We entered the crisis in 2020 in a much better shape than we were. We have a cash-generative business model by design. We have a diverse team whose engagement rate is very high in a difficult environment. We have client traction and real solutions to offer them. Today, despite the crisis, Sodexo is building on its promise. The team and I are creating a collective momentum and a clear path to greater shareholder and stakeholder value. Thank you.
Thanks very much, Denis. Now for our final Q&A with Denis and Marc, and with the help, as always, of our operator.
Thank you, ladies and gentlemen. As a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, if you wish to ask a question, please press star and one. Your first question comes from the line of James Ainley from Citi. Your line's open. Please ask your question.
Great. Thank you. I have three questions, please. The first one, Denis, you mentioned earlier that some of the SG&A savings were coming from reducing the global structures. I guess the question is, are we returning to a business where the geographies have more dominance, as they had in the past? Can you talk about the balance between the geography and the segment organizations in the organization? The second question is, just on those SG&A savings, can you just give us a bit more flavor of what programs will underpin those cost savings? I mean, is it principally headcount reduction? The third question is, there was mention earlier about central ghost kitchens. Is there an opportunity to service B2C delivery platforms with that capacity in the evenings and at the weekends when, I guess your B2B clients may not be active?
Just be interested in some thoughts on wider scope for that central ghost kitchen capacity. Thank you.
Thanks, James. Marc will take the second one. I'll take the first and the third one. Regarding your question on the balance between geographies and segment, I must say this is something that I've been working a lot since the past three years. Definitely the segmented model brings a lot of value by being client-centric. Of course, our business is very local. The weight of the geographies is very important in coordinating and being close to the clients. What we are doing is concentrating the segments and particularly the global structure in really building relevant strategy. Of course, fed by what comes from the regions, and concentrating on that. The segments are, of course, present in the regions, and it's the local regional leadership committees that really make things happen. That balance is a subtle one, but I think we've made good progress.
We've made good progress in the coordination of all our dimensions, and definitely putting much more weight and many more resources close to the field. Keeping that strategy being global because the strategy is a mix of what you get from the field and global thinking. On your third question regarding central kitchens. Yes, central kitchens and offsite production units is a wave that accelerates. Definitely to be clear, B2B will be the massive endeavor on this, the massive volumes. We have here and there done some actions to put some of our services, some of our food offers on B2C platform. I think it's going to remain very small. You don't create a brand. The question is not to put an offer on the platform. It's to let it known. You need advertising. The immense majority of the business that we'll do will remain B2B.
Of course, with at the end, a consumer that we serve through a client.
Yeah. On your second question, the bulk of the reduction is people-related. We estimated, and it's part of the slide, that 90% of the restructuring cost will be a cash restructuring cost, so paid to get those FTE reduction. The balance is some assets, tangible or intangible, linked to real estate, to IT, that we will have to write off. It's 90% cash impacting and it's 90% people-related.
Okay. It's clear. Thank you very much.
Next question comes from the line of Vicky Stern from Barclays. You may ask your question.
Yeah, hi. You scoped that for us quite helpfully, that potential size of the working from home shift in terms of food volumes. In North America, in the conversation there, you talked about the fact that Corporate Services is quite small, so you don't see a big issue coming from the contraction of corporate real estate. Just curious around your assumptions on the impact from FM or for FM, if you see the sort of knock-on effect from work from home, being something that leads to a contraction of real estate or office space. Then just two questions around the offsite production. Just firstly, the net margin on producing in ghost or central kitchens when you add in that delivery element, just how does that compare to preparing on-site?
I'm also curious just to know how material you see that offsite production being in the future versus on-site. I'm not sure today what your mix is in terms of how much is produced on-site versus offsite, just, yeah, curious to know where you think that goes. Thanks.
Thanks, Vicky. On the first question, definitely as Sarosh and Sunil pointed out, the market is immense. A contraction of some real estate can have some impact, but the market is so big that the opportunities of development are there. I think I'm not worried about this. We see this coming and going. We already see that in our strategic accounts. Sometimes they reduce a little bit their footprint, they adjust, and we accompany them, and then we grow in other places. It's something where, again, that there are huge development areas. On the net margins on delivery, I think we know that once you've reinvented your processes, once you've put them in place, of course it takes a bit of time, but the ramp-up in margins is good and we know that we can be more productive.
Labor cost on-site is a significant part of our cost, and that mix between the offsite production and a reduced staff on-site is definitely progressively accretive to margins. I don't know if Marc, if you want.
Those cloud kitchen in urban centers, if you manage to limit the number of menu items they produce on a daily basis, you can reach high productivity out of them. If the delivery is really nearby and that you're not spending hours delivering the food, then it becomes very productive. It is a very good alternative to on-site production, provided you have this proximity. We are talking mid-size kitchen. We can't have a massive kitchen and deliveries spreading over tens of kilometers. You really have to be in city centers and l ike in most of our business, as you know, density is an important parameter to our business, and simplicity.
Yeah.
If we can keep it simple with density, margins are pretty good.
Thank you. Yeah, just how material you see that being in terms of the mix of on-site versus offsite production.
It's too early to say. We have several models. We are ramping up those kitchens. We are using some already existing kitchens that we have. We are using some facilities. We're building some. We are renting. The whole thing is building up. It's really too early to say. We have different trajectories, and the future will tell us on which trajectory we will be. Definitely, we have momentum on that.
Okay, thank you.
Your next question comes from the line of Jamie Rollo from Morgan Stanley.
Thanks. Three questions again, please. First, I think earlier in the presentation, you said one in three requests in North America are from first-time outsourcing. I think you also said first-time outsourcing is 40% of the North American pipeline. I'm just wondering how those figures compare to sort of a normal year, please. Secondly, going back to the working from home, 27% drop in revenue. I appreciate that's only sort of EUR 460 million as your sort of worst case, only 2% of sales. That sort of drop would make most catering contracts unprofitable. Might you have to exit some complete contracts, such that the revenue loss could be nearer to the EUR 1.7 billion figure? What can you do with the cost base, or what can you do with the contract type to protect your margins in that scenario?
The final one, it's a bit left field, but you spoke at the beginning about the benefits of the Bellon holding. Of course, Sodexo owns effectively 8% of its own shares through the Sodexo stake, which has a big stake in Bellon. I mean, do you need to have that stake? Can you not simplify the structure, and reduce the shares at issue at some point?
Okay. As far as the request for first-time outsourcing, yeah, we see this as very encouraging. We see this also as a result of two things. Of course, a natural market trend, but also the efforts that we've put in targeting our business. Bruno was mentioning how we have revamped our, particularly North America, how we've revamped our sales approach. I'm quite positive. I would say it's higher than normal. It reflects, actually as I said, market trend and our efforts to also target first-time outsourcing. It's encouraging. In terms of the reduction in number of days, first you have to know that at that moment, we renegotiated a lot of our contracts, if not all of them, the immense proportion of them. What we know is the new ways of operating help us manage our cost in the most efficient way.
We've learned a lot during the first wave of the crisis. We've learned a lot. That will help us a lot during this second wave, definitely. That will help us also moving forward. We've invented new ways of producing food, being sometimes more focused, pleasing our consumers in difficult moments. I think this is manageable. Of course, we said, we have decided to exit few contracts linked to the crisis. We've kept the vast majority of them because we believe that these contracts, even though they are less profitable at the moment, they can really help us ramp up the volumes once the sanitary crisis is over. I don't know if you want to complement on this question, Marc?
Yeah. If truly nothing changed, but the volume drops, obviously you have an impact on margins.
Yeah, of course.
As the volume drops, we are re-discussing and for instance, the offers become different. You don't get all the choices you had before when it was a full building. You have a different offer. You bring from outside and so forth. There is more digital, which increases the average ticket. It's a question of redesigning the offer. It cannot just be the same offer with less volume. Once redesigned, we believe the margins will be the same.
For the third question?
Do we need it? We have it. It doesn't bother us. It's there. Right now, we haven't had recent discussion on this. I don't know. I can't tell you more than that at this stage.
Okay, thanks.
Your next question comes to the line of Kean Marden from Jefferies. Your line's open. Please ask your question.
Thank you. I appreciate this might be rather difficult to calculate in detail. When we think about the evolution in CapEx as a percentage of sales from about 2% of revenue, pre-COVID to your 2.5% that you mentioned on slide 38, can you just help us understand the building blocks there? Maybe pre-COVID, you had more growth CapEx, and then a baseline of maintenance CapEx, but maybe very little investments in new food models. How we can compare those proportions, to build up to the 2.5%? I guess when we look at your presentation, there are a lot of great initiatives there on micro markets and digital investments, and dark kitchens, and those tend to have slightly higher capital intensity. Can you please help us break that down, please?
Yeah. First in CapEx, you have BRS, and we said BRS is 9.1% and will potentially get to 10%. BRS alone is about, let's say EUR 75 million- EUR 80 million. There is that increase that we need to factor in because a few years ago, they were at 4%, 5%, so that contributes. As we said, we are investing more in IT. There is, what I would say, it's not so much front office. I will qualify it as back office, but it's not totally true because a lot of IT CapEx is used for front office. Let's say infrastructure, IT, security and applications, we've decided to increase on that and that was what we said two, three years ago, and it's very true today. I think we said that we were investing EUR 60 million in IT and part of it is increased CapEx.
There are, what I will qualify as the front office CapEx, the one we find at clients. This is probably about 2/3 of our CapEx. Two years ago, what we thought is that university and sports and leisure will be the bulk of our CapEx increase in the next two years. Right now, universities and sports and leisure, we've commented on it. There will be some CapEx because we have maintenance CapEx. We have contractual CapEx in universities. We've made some CapEx in September, coming back from agreements we had a few years. There will be maintenance CapEx, but you need to win new contracts, new deals to be spending significant additional CapEx. We may not sign a lot of sports and leisure in the next year, or maybe a little less university, so we will have less CapEx on this.
At the same time, since we are picking up, what we call the new food model items, we will invest in more central kitchen, cloud kitchen, commissary, trucks and deliveries capabilities and so forth. We believe the two and a half is not exactly going to be done the way we thought about it two years ago on universities and sports and leisure. More new food models for the next two years, after two years, universities and sports and leisure will kick back, and they will pick up. Two and a half seems to be a good target for us going forward.
The fact that kitchen have a higher capital intensity.
It turns out higher capital intensity, it depends because sometimes.
Not necessary.
We invest in a client kitchen, and then we can only use it for that client. Tomorrow, we use it outside, and we can use it, let's say, with a lot more flexibility. A central kitchen of a mid-size is not a huge CapEx investment, but we need quite a few mid-size. We don't want to have gigantic kitchen and kilometers and hundred of kilometers of deliveries route to attend to. We need smaller units close to the urban centers.
You can rent some spaces.
We can rent and equip. Yeah. I am not worried about kitchens CapEx.
I think we can take a last question.
Next question comes to the line of Richard Clarke from Bernstein. Your line's open. Please ask your question.
Thank you very much. Thanks for sneaking me in there. A couple of questions to finish, if I may. Just on the working from home trends, again, just coming back from that, you seem to be suggesting that's only gonna be on the food side. I'd be wrong to assume that the FM services must have some correlation with the population in the office, and therefore, what are you thinking in terms of the FM flex, if we do see more flexible working? You've also commented that you're gonna dispose of non-core activities and geographies. Obviously, you've said that before. You've gone from 80 to 64 countries. Is there anything that's non-core today, that wasn't non-core before the crisis? Maybe if you could give us some hints as to what that might include and the timeline, and scope of those disposals.
Yeah. Thanks, Richard. Of course, FM services are, of course, linked to the sq m that we run. When square meters are reduced, there's an impact. What I'd like to say is, as Sunil pointed out, clients want, if they reuse their real estate, they want great spaces for people to work and collaborate and have a great time. That means, extra services, extra integrated services, because you cannot create a full workplace experience if you deal with 25 suppliers. That capacity of ours to bring everything together and create a great workplace experience is unique. Together and, of course, linked with also the food experience. Again, the impact of work from home can be compensated partly by the new food models and new ways of addressing the convergence, but also by this really active FM demand on which we are absolutely relevant.
On the disposals, Marc, you want to say a word?
We just revisited our assets, our geographic footprint, and the opportunity to dispose of some assets, and we've increased the list. I would say we kept the spirit of the list we had 18 months ago. It's just that the list has become longer. Again, we are talking small assets. It's more a question of us being more focused, less distracted, and so forth. We're not talking hundreds of millions of revenues, but it's still happening, and we are going to make it happen. The list has got longer. Yeah.
It's bringing efficiencies because it's bringing more focus. I think you understood that being more focused on what's core has been really a driver to our decisions. Just before Dianne wraps up the day, I just wanted to leave you with four key takeaways that we have from that crisis and moving onwards. First, digitization is key and will be key in the future. We've done great progress, and we are accelerating on that, both in Onsite and BRS. Second, having flexible production and delivery models accelerated by the convergence between BRS and Onsite is a critical asset to capture more of the consumer spend and to be closer to the new consumer's ways of life. Third, integrated services and the potential of facilities management and integrated facilities management services is massive. We are, again, uniquely placed on that. Fourth, sustainability is already embarked in our offers.
We are leading our industry on this. That's gonna be a critical asset moving forward, a critical ask for client and consumers, and we are also accelerating on this. The COVID crisis has confirmed that all the efforts that we've made in the past on this are absolutely relevant and will help us lead the pack on this.
Terrific. Thank you, Denis. What a great summary of four key takeaways. It's been a real pleasure hosting this virtual Investor Day. I'd really like to thank everybody for joining us. I'd also like to thank the Sodexo teams and those in the studio who helped put this event together. I hope you now have a much clearer idea of how we're going to reignite profitable growth going forward. As I mentioned at the beginning, today's broadcast will be available on our website shortly. Please enjoy the rest of your day, and stay safe. Goodbye.