Sodexo Europe CEO Philip Jansen takes over at Brakes in February. Peter Cripps asks what the change at the top means for the foodservice giant

When The Grocer broke the news in September that Brakes was looking for a successor for chief executive Frank McKay, the name of Philip Jansen wouldn't have featured on many shortlists for the job.

The move could be seen as a backward step for the highly rated global chief operating officer and European CEO of foodservice giant Sodexo, whose turnover of more than £10bn dwarfs Brakes' £2bn which makes the question of what appeal the Brakes job holds for Jansen an intriguing one.

The answer, almost certainly, lies in the challenge debt-laden Brakes represents for the renowned turnaround merchant.

Having previously worked his magic on MyTravel and Telewest, Jansen was parachuted into Sodexo five years ago to rescue the UK and Ireland business, which had seen a dip in profits. In the year ending 2006, two years after Jansen joined Sodexo, the UK business returned to sales growth for the first time in three years.

Brakes presents a new set of chalenges for Jansen. The business made a pre-tax loss of £100m in the year ending December 2008 and it has debt of roughly £1.5bn 23 times its operating profits of £66m. Jansen will doubtless be motivated by the task of making Brakes a more nimble business, not to mention the promise of a lucrative benefits package.

Not that he will be starting from square one. It is widely agreed within the foodservice industry that McKay has done a good job of streamlining the Brakes business to deal with the recession.

Over the past year, he has taken more than a tenth of its 1,500 trucks off the road, made 200 staff redundant and shut four depots as part of an efficiency drive. The business is trading well as a result.

But if private equity owner Bain Capital is to make any money out of Brakes, having shelled out £1.3bn for the company two years ago at the top of the market, it will have to tackle its debt.

In its most recent results, Brakes' debt increased from £1.3bn to £1.5bn because much of it had been borrowed in euros, which have risen markedly in value against the pound.

Exacerbating matters, Brakes' long-term debt is variable rate. With economists speculating that the pound could reach parity with the euro as a result of the UK's prolonged recession and with interest rates set to soar in the medium to long term, Brakes' debt mountain could grow even further.

A harsh outlook for the foodservice market, which has already been marked by intense competition as consumers and businesses tighten their belts, will present a further test of Jansen's leadership abilities, according to Peter Backman, MD of Horizons' foodservice consultancy. "The economy is in worrying shape and there is due to be a squeeze on public sector contracts next year, which will make life tougher for many foodservice providers," he says.

But the real issue facing Jansen, according to foodservice bosses, is not the performance of the business but how to pay down its debt. Some say Jansen is being brought in to float the business in the next year or two.

"Jansen is going to have to do something about that debt," says one foodservice boss. "He is either going to have to float the company or start to sell off bits of it, such as its retail arm CountryChoice. Bain is not a charity and will be looking to get a return on its investment within the next three years. Jansen's job will be to deliver for them."

Sodexo boss lined up for Brakes (23/10/09)
Bain Capital starts hunt for McKay’s successor (26/9/09)