Caterer that paid up over mice in school kitchen returns to profit

A catering company owned by the billionaire Coates family has reported a return to profit, after it emerged that the company had served food from a mouse-infested kitchen to primary school children and failed to pay staff the minimum wage.

ABM Catering Solutions is owned by the Labour donor Peter Coates and his family, including his daughter Denise, who is known for her record-breaking pay deals for running the family’s Bet365 gambling empire.

Serving food at care and retirement homes, schools and football stadiums yielded after-tax profits of £882,000 in the year to July 2023, boosted by a tax credit of £265,375 from HM Revenue & Customs.

The catering business had also built up £5.6m of cash in the bank by the end of the year, according to Companies House filings for ABM Catering (Holdings) Limited.

But within months ABM had paid an undisclosed sum to West Northamptonshire council in an out-of-court settlement over its failure to follow food hygiene laws.

The company, based in Warwickshire, was also among 500 that were named and shamed by the government in February this year for not paying staff the minimum wage. It was forced to repay a combined £17,195 to 270 workers.

The Coates family, based in Stoke-on-Trent, are worth nearly £7.5bn, according to the Sunday Times Rich List, with the bulk of their wealth stemming from the Bet365 betting empire run by Denise Coates.

Her father, Peter, was a pioneer in football stadium catering who sold his business, Lindley Catering, to the pan-European food services business Sodexo in 2001, as the family dynasty switched to the fast-growing world of online gambling.

But Peter Coates retained a catering operation, since rebranded as ABM Catering, building a business with revenues of more than £37m over two decades.

ABM has won £106m of public sector contracts since the start of 2018, the majority with primary schools, according to the procurement experts Tussell. It has also served food at football clubs including Wycombe Wanderers, Carlisle United and Stoke City, owned by the Coates family.

Peter Coates, who has personally donated £160,000 to the Labour party since 2004, as well as £25,000 to Keir Starmer’s campaign to lead the party, has majority control of the business. None of the Coates family is involved in the day-to-day running of the business or draws a salary from it.

But the latest Companies House filings that show individual shareholdings, from 2022, indicate that multiple members of the family held significant stakes. They include Denise Coates, who resigned as a director of the company in 2020.

Two years earlier, in 2018, health officers from West Northamptonshire council visited Greens Norton primary school, in Towcester, after parents complained that mice had been seen in the school’s kitchen. The council said ABM had known about the infestation but continued to trade.

It prosecuted the company for offences including failure to ensure a safe environment for food preparation, failure to comply with food hygiene standards and failure to implement adequate pest control procedures.

A court dismissed ABM’s legal challenge to the council’s claims and the two sides reached a settlement under which the company was served with a caution, admitted culpability and agreed to pay the council costs of £37,000, in lieu of a trial.

“It is unacceptable that ABM put the health of our children at risk by continuing to serve them food after being made aware of a mouse infestation,” a councillor, David Smith, said at the time.

ABM said it had raised the infestation with the school but that its own protocols were not followed, meaning the company’s health and safety team and its board were not aware of the problem until after health officials had visited.

The company subsequently closed and cleaned the kitchen, won a five-star hygiene rating and was selected by the school to renew the contract. ABM said the breaches of hygiene law were “regrettable” and the prosecution was the only one in its 40-year history.

In February, ABM was one of 500 firms named by the government that had not paid staff minimum wage; ABM failed to pay 270 workers an average of £63.69 each.

ABM said it was informed of the failings by HMRC in 2020. They included not accounting for the time staff spent passing through mandatory security checks and requiring workers to wear black clothes, which was considered a uniform that the company should have provided. Staff were also undertaking training outside working hours, for which they were not paid. The company said it had resolved these issues as soon as HMRC made it aware.

Zarah Sultana, MP for Coventry South, said: “Companies shouldn’t be allowed to get away with behaviour like this.” She added that “tougher regulation and meaningful action” was required.

Companies House filings show that ABM paid its 1,216 staff £17.7m last year. Online recruitment ads posted by the company include several positions on a zero-hours contract, while others are advertised for less than the £12-an-hour “real living wage”, as defined by the Living Wage Foundation. Two catering assistant positions are advertised for the national minimum wage of £11.44 an hour, including one in Towcester.

The filings show that ABM paid its directors more than £625,000 in the year to 28 July 2023. Shareholders, composed chiefly of members of the Coates family, received no dividend, having taken a payout of £200,000 in the previous year.

Revenues at ABM surged by 20% in the year, from £31.2m to £37.4m. The company reported an after-tax profit of £822,000, compared with a loss of £3.6m last year. The loss was largely due to the company’s voluntary decision to repay £3.8m of furlough money received from the government during the Covid-19 pandemic.