The UK rail watchdog, the Office of Rail and Road (ORR), has raised concerns over a lack of competition in railway station catering, potentially inflating costs for passengers. SSP Group, the parent company of Upper Crust, faces scrutiny following the ORR’s findings.
The ORR’s final report, released on Wednesday, highlights the impact of limited competition among retail providers on passenger and taxpayer costs. London-listed SSP Group, which dominates the railway station catering market with brands like Upper Crust, Ritazza, and Camden Food Co, owns 20-30% of British outlets and accounts for 40-50% of passenger spending.
The ORR has called for changes in the tendering process, including simplifying contracts for new entrants, although it stopped short of recommending intervention from the Competition and Markets Authority (CMA). Previous findings indicated that prices at railway stations are 10% higher than on the high street.
Russ Mould, investment director at AJ Bell, described the watchdog’s announcement as “bad news” for SSP. He noted that SSP has benefited from selling items at above-market prices due to its sector dominance, as travelers often have limited time or choice.
Despite the potential shake-up, SSP’s shares remained stable by midday, as investors remained optimistic about the firm’s global travel demand prospects. The company reinstated its dividend in May after reporting £1.5 billion in half-year revenue, anticipating a busy summer of sporting events in Europe.
Mould remarked that investors seem confident in SSP’s resilience and global presence. However, SSP’s share price has yet to recover from the COVID-19 pandemic, with earnings in Europe affected by falling margins and train strikes. Mould warned that increased competition would add to the challenges SSP management must address.
SSP Group has been approached for comment.
By Benjamin
The UK rail watchdog, the Office of Rail and Road (ORR), has raised concerns over a lack of competition in railway station catering, potentially inflating costs for passengers. SSP Group, the parent company of Upper Crust, faces scrutiny following the ORR’s findings.
The ORR’s final report, released on Wednesday, highlights the impact of limited competition among retail providers on passenger and taxpayer costs. London-listed SSP Group, which dominates the railway station catering market with brands like Upper Crust, Ritazza, and Camden Food Co, owns 20-30% of British outlets and accounts for 40-50% of passenger spending.
The ORR has called for changes in the tendering process, including simplifying contracts for new entrants, although it stopped short of recommending intervention from the Competition and Markets Authority (CMA). Previous findings indicated that prices at railway stations are 10% higher than on the high street.
Russ Mould, investment director at AJ Bell, described the watchdog’s announcement as “bad news” for SSP. He noted that SSP has benefited from selling items at above-market prices due to its sector dominance, as travelers often have limited time or choice.
Despite the potential shake-up, SSP’s shares remained stable by midday, as investors remained optimistic about the firm’s global travel demand prospects. The company reinstated its dividend in May after reporting £1.5 billion in half-year revenue, anticipating a busy summer of sporting events in Europe.
Mould remarked that investors seem confident in SSP’s resilience and global presence. However, SSP’s share price has yet to recover from the COVID-19 pandemic, with earnings in Europe affected by falling margins and train strikes. Mould warned that increased competition would add to the challenges SSP management must address.
SSP Group has been approached for comment.