Kuehne + Nagel (K+N) is to invest £5m in multi-temperature distribution centres and a fleet of 60 vehicles for a long term new food service customer, Spirit Pub Company.

K+N  sees food service as a significant growth market, already representing £50m of its UK contract logistics business, much of it with Whitbread, where volumes have grown 50% to 31m cases a year since 2008.

Spirit demerged in September 2011 from Punch Taverns, and is one of the UK’s leading pub operators with an estate of over 800 managed pubs and more than 500 leased pubs trading under brands including Chef & Brewer, Fayre & Square and Flaming Grill.

K+N will be converting its Greenford ambient centre to multi-temperature operations for the Spirit contract, which will also be served by its Trafford Park composite distribution centre. Around 200,000 ft2 of warehousing space and over 300 employees will be dedicated to the deal as well as 60 delivery trucks. It will handle up to 1,000 chilled, frozen and ambient product lines – mainly menu ingredients - plus consumables on multi-drop operations.

K+N senior vice president for sales and marketing in North West Europe John Hartley, tells MT that the company sees food service for large national contract caterers as well as pub and restaurant chains as a major growth opportunity.

He argues that outlets still using traditional wholesalers can get better visibility of logistics and food costs by buying centrally and switching to a 3PL for their distribution.

K+N announced group turnover up 9% to CHF22.1bn (£15.3bn) in 2011 excluding the impact of a 12.2% appreciation of the Swiss franc against the company’s main trading currencies. Gross profit rose 11% to CHF6,660m (£4,602m), increasing gross margins to over 30% and keeping the company on track to hit its target of a CHF1bn profit by 2014..

Although the company does not disclose country figures, the company said UK turnover grew 14.7% at constant exchange rates.