How SODEXO functions?

If you are living in a metro, you must be using the Sodexo coupons in order to achieve tax savings. My question to you is, are you really saving something?

Though it looks like you are entitled to buy food items for the amount that the Sodexo is worth which is the same that the actual currency will buy, but it is not exactly so. Have you ever thought of, how this Sodexo setup is functioning? What benefit they are getting by providing you the tax savings? I’ll try to explain.

sodexho-orig

Sodexo is a French company with the size of around 413,000 employees and revenues of 16.04 billion euros established since 1966 under the leadership of Pierre Bellon. Now they operate in 1500+ cities with 25000+ outlets registered with them. The size of organization itself states the grand success, and makes it the World’s largest Meal coupon company. But here comes the zeal to know the operational strategy they hold. How they are earning by providing tax savings to people.

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The very simple answer is commission. They take commission from the retailer of around 4-7% (depending upon the size of the retailer this number varies. Higher the volume lower the commission). This operation starts from the day when you pay a shopkeeper with a value (for example) of 100 rupee Sodexo meal coupon. Once the shopkeeper receives it from you, they give the same to Sodexo for paying them cash in return. Sodexo returns the cash value of around 95-96 rupee to the retailer in 25-35 days. With the revenue of around 18000 million euros every year constitutes a high turnover per month, which stays on hold in stack of the company till they pay back to retailer, which earns another big opportunity to invest in and to make money with.

Now the question arises, what a retailer is getting out of it, because of which he is ready to pay extra 4-7% to an external agency? The answer to this is nothing, so he is not even paying for this extra 4-7% commission. It is only the end consumer who is paying for this. Do not believe me?

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Go and try a local vendor who accepts and one who does not accepts the meal coupon, you would find a price difference in both of the vendors. Or try with a vendor (who accepts Sodexo) to pay in cash and bargain on the total price, he would provide you with some discount. Even there exist a few vendors who actually apply additional charges of around 4-5% if you pay by Sodexo coupons so that everybody is not charged additionally if they are not opting Sodexo.

(Going little out of the topic, to make this article more beneficial for you, same holds true in case of the transactions done by credit cards at local shops. They are charged of around 1.5-2.5% for each transaction by banks, and if you negotiate with them over this in terms of paying cash, you may get this extra 2% in your pocket) So always remember, the things those bring ease to you, come with an additional cost. Sometimes affordable and sometimes non-affordable.

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Now the question next strikes on mind is that what the governments are getting by allowing an external agency into this tax rebate process and cutting off their taxes and allowing others to take away the money out of the country. What the idea is behind launching and allowing these services in?

They are simply following the FDI model, getting employment into the country, earning taxes indirectly and most importantly, ensuring that the tax rebate provided on food allowances is used for the food expenditures only.

Now think, are you really saving your taxes and is it worth investing in Sodexo or any other meal coupons?

Have Happy Savings..!!

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