Compass feels pinch in school lunch breaks.

Catering group Compass has reported a weak performance at its schools arm as students shunned healthier food during their lunch breaks.

The company reported a 6% increase in pre-tax profits to pounds 363m during the year to September 30 as revenues grew 7% to pounds 10.8bn.

Compass has been rebuilding after a profits warning caused by weaker margins on UK school meal contracts and poor summer trading in Europe.

The firm reported turnover at the UK operations had remained generally flat at pounds 1.95bn, but admitted feeling the pinch in school canteens. In March, Compass said the state education sector remained the most testing as clients came under pressure to overhaul school menus.

And it said: "Parts of the education sector continue to remain challenging with organic revenue declining 4% overall. This is largely a result of reduced participation, particularly in state secondary schools, as the take-up of healthier options remains slow."

The Surrey-based company expects business to remain challenging in 2007 ( particularly in the education sector ( but said it was already making cost efficiencies.

Compass serves one in every 10 school meals in the UK and insisted there were no problems with its contracts to provide food to primary schools.

But a spokesman said it was experiencing difficulties with its secondary schools following the introduction of healthier menus in September.

The campaign for better quality meals was sparked by celebrity chef Jamie Oliver, although it seems youngsters still hanker over fatty lunch options.

The company said that ( unlike primary school children ( older pupils can walk out of the school gate at lunchtime if they do not like what is on offer.

Compass suggested a "longer phased approach" might have been more successful, with closer working between education authorities and parents to discuss the changes.

The spokesman said: "The standards came into force in September and all of a sudden we introduced healthier food. Unsurprisingly, it takes a while to get used to."

The firm has seen the benefits of a steadier introduction of healthier options at schools in Lewisham, south-east London, where it has been adapting menus for two years.

The company settled its pounds 600m lawsuit over United Nations contracts in October for less than pounds 40m following a dispute with Monaco-based Es-Ko and Swiss rival Supreme Foodservice.