Railway cafés struggle as people lose their appetite for travel

The catering group behind the Upper Crust and Ritazza café brands has given warning that demand “may well remain subdued” this winter as it reported a £1.3 billion slump in second-half sales. Read more: Railway cafés struggle as people lose their appetite for travel

Railway cafés struggle as people lose their appetite for travel

The catering group behind the Upper Crust and Ritazza café brands has given warning that demand “may well remain subdued” this winter as it reported a £1.3 billion slump in second-half sales.

SSP, one of the world’s biggest airport and railway caterers, said that it had seen some limited improvement in passenger demand and that it had now reopened a third of its outlets, although its sales in the past six months were still down 86 per cent year-on-year, at the lower end of previous guidance.

At the beginning of June SSP added to the employment gloom enveloping the UK as it announced up to 5,000 job losses across the UK, although Simon Smith, the chief executive, suggested recently that the final total may be “slightly less than that”.

In a fourth-quarter trading update, SSP said that current weekly sales were running at 76 per cent below last year’s level, representing an improvement from the third quarter, when sales were 95 per cent lower in April and May and 90 per cent lower in June.

It said that the improvement had been driven by a stronger recovery in Europe, where weekly sales were 66 per cent lower year-on-year, compared with the UK, North America and the rest of the world, where sales remained 80 per cent to 85 per cent lower.

In the UK, an increase in holidaymakers over the summer brought a recovery in the air sector, although SSP cautioned that this had been offset by much lower capacity and quarantine restrictions. After a very weak third quarter, its rail business recently saw a slow recovery as commuters returned to the office.

SSP, once part of Compass Group, operates about 2,800 outlets at 180 airports and 300 railway stations in 36 countries. It operates its own brands, such as Upper Crust and Camden Food Co, as well as franchises such as Burger King, Starbucks and Jamie’s Deli.

Before the Covid-19 crisis shut down most of its operations, its 40,000 workers served about 1.5 million customers a day, but during the lockdown most were put on furlough as the company grappled with what Mr Smith, 48, called “a crisis like no other”.

Today, the SSP boss said that the pandemic “continues to have an unprecedented impact on the travel industry and SSP’s businesses in all geographies”, although the steps taken to cut costs, preserve cash and strengthen its finances would “enable us to emerge fitter and stronger” as passenger travel returned.

While sales remained weak, SSP said that in the second half of the year its actions had resulted in “a materially lower cash usage than anticipated”, with underlying earnings and operating losses “broadly in the middle of the range indicated”. The 1,100 units reopened were also ahead of expectations.

For the second half, SSP said that it expected to report underlying earnings of about £155 million and an operating loss of about £250 million.

It said that its reduced cash usage had been achieved thanks to rent waivers and deferrals, a cut in capital expenditure, tax rebates and government support schemes. It said that it had liquidity headroom of up to £500 million and that its cash burn was £25 million a month. SSP tapped investors for £216 million in June with a 315p-share placing.

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Railway cafés struggle as people lose their appetite for travel

Source : Business Matters More