Bernstein Compass Group PLC (CPG.LN): AI Opportunities from Data Infrastructure to Productivity
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Bernstein highlights how Compass Group (CPG.LN), the world's largest food services company, is leveraging artificial intelligence across two primary dimensions: data infrastructure catering and internal productivity. The firm maintains an Outperform rating with a target price of 2,800 pence, based on a 2027 EV/EBITDA multiple of 14x.
As tech giants expand data center capacity, on-site catering demand is surging. Compass has secured contracts with multiple hyperscale cloud providers. This data center catering segment currently represents roughly 5% of total revenue but is growing at 15% to 20% annually, approximately three times the company's overall growth rate. These large-scale, standardized contracts also yield higher-than-average margins.
Internally, Compass is deploying AI tools across its operations to drive efficiency. Current applications include demand forecasting, which reduces food waste by 10% to 15%, dynamic pricing, and automated scheduling. AI tools currently cover 30% of operational sites, with a target of reaching 70% by 2027. These productivity enhancements are expected to lower operating costs by 1% to 2%, effectively boosting 2027 EBIT by 3% to 5%. While near-term capital expenditures will increase by approximately £50 million, management remains confident in the return on investment. Key risks include potential slowdowns in data center construction and lower-than-expected AI adoption returns.
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