ORR calls for more competition in station catering

[Snow1964]

Looks like the ORR is looking at station catering and comments specifically in the notes, about £700m profit, but only £100m going to station, so would like to see more invested in improving station, seems sensible to me, what do others think

The Office of Rail and Road (ORR) has found that the railway station catering market is not working as effectively as it should be. Greater competition in this market would drive better value for passengers and for taxpayers.

ORR is investigating this sector because it believes that a more competitive market would provide better options for passengers and allow station operators to increase investment in the railway. The regulator’s report finds that outlets can stay in the same hands for extended periods because their leases are protected. Those who run stations are not sufficiently incentivised to invite competition for outlets. Even when unprotected leases come up for renewal, the most common practice is to roll over or extend the lease without an open competition. Competition for outlets is a crucial factor across the market, because nearly half of all stations (47%) with retail space have just one outlet.

These weaknesses in the station catering market also mean that station operators may have less income to invest in improving stations and services, increasing the need for taxpayer support.

ORR’s report finds that the features of the railway station catering market may also contribute to an average 10% price premium at stations compared to the high street.

ORR’s investigation is continuing, and the next stage will focus on what recommendations should be made to government, station operators, funders and other stakeholders to improve the functioning of the market.

1. Station catering retailers earned total revenue of around £700m in 2022/23. Station operators (Network Rail and train operators combined) earned a little over £100m in rental income from leasing outlets for catering services in 2022/23.
2. In total 2,367 railway stations fell within the scope of the ORR’s study. This includes all the mainline stations operated by Network Rail and train operators funded by the UK and Scottish governments.
3. Of the approximately 20% of stations which have catering offered, almost half (47%) have only one outlet. This large number of single-outlet stations acts as a natural barrier to head-to-head competition at stations.
4. Protected leases: 24% of station outlets are currently covered by ‘protected’ leases formed under Part II of the Landlord and Tenant Act 1954. Such leases provide an automatic renewal on similar lease terms (subject to rent reviews). There are grounds of opposition for the landlord (usually the station operator) to terminate protected leases, but in practice they are difficult to apply.

Rail Regulator calls for greater competition in railway station catering | Office of Rail and Road

The Office of Rail and Road (ORR) has found that the railway station catering market is not working as effectively as it should be. Greater competition in this market would drive better value for passengers and for taxpayers.

www.orr.gov.uk

https://www.orr.gov.uk/sites/default/files/2023-12/railway-station-catering-market-study-interim-report-december-2023.pdf

 

[zwk500]

Ne careful what you wish for. Small individually run shops will be outbid by big chains on an open market, if there's still money to be made. If there's not money to be made, the railway may well find itself down on revenue and need to pick up the tab from another source.
Having said that it wouldn't be a bad thing to see some chains get shaken up a bit by some competitive action.

 

[Snow1964]

Ne careful what you wish for. Small individually run shops will be outbid by big chains on an open market, if there's still money to be made. If there's not money to be made, the railway may well find itself down on revenue and need to pick up the tab from another source.
Having said that it wouldn't be a bad thing to see some chains get shaken up a bit by some competitive action.

Sounds like the market is dominated by SSP, a concession aggregator, with brands like Starbucks, Burger King, Upper Crust, Cafe Ritazza, WH Smith's etc.

Then goes onto say completely different to TFL stations where they focus on SME (small, medium Enterprises).

But actually having a local who is interested is often nicer than many franchised outlets. So I am with you on this.

 

[SamYeager]

£700m revenue is all fine and well but it's not the same as profit. Stations may "only" get £100m in rental fees but how much work do they have to do for it? Is the electricity and heating included in the rental fees or does the shop have to cover it out of their £700m revenue in addition to staff costs? I do feel the ORR is being disingenuous.

 

[yorksrob]

There should be a particular effort in attracting and retaining small, independent enterprises, such as the excellent little station buffet at Huddersfield, which unfortunately closed recently.

 

[Egg Centric]

Sounds like the market is dominated by SSP, a concession aggregator, with brands like Starbucks, Burger King, Upper Crust, Cafe Ritazza, WH Smith's etc.

Then goes onto say completely different to TFL stations where they focus on SME (small, medium Enterprises).

But actually having a local who is interested is often nicer than many franchised outlets. So I am with you on this.

Indeed, maybe it would be better to have a limit on how many leases a single operator could have in a station, so that there was genuine competition in the likes of Euston rather than a bottle of coke (say) being the same price in every store.

Competition for leases is more likely to lead to price gouging than benefiting the consumer (would be different if railyway was a capitalistic enterprise as we would expect the increased rents to benefit passengers, but it isn't...)

 

[DMckduck97]

Sounds like the market is dominated by SSP, a concession aggregator, with brands like Starbucks, Burger King, Upper Crust, Cafe Ritazza, WH Smith's etc.

Then goes onto say completely different to TFL stations where they focus on SME (small, medium Enterprises).

But actually having a local who is interested is often nicer than many franchised outlets. So I am with you on this.

Sounds like SSP almost have a monopoly on Waterloo Station then, I'm baffled how upper crust still survives in stations with its pure profiteering pricing model.

 

[185]

This is something raised eight months ago with the ORR which, for passengers is essential to ensure they have a choice and not be ripped off by SSP.

In the main the problem seems to be mostly at Network Rail Major Stations who've allowed this for 20 years, and perhaps for stations with over 3 catering units a tenant maximum occupancy limit could be set at say 25% for SSP and all their related business.

Should lead the way and show airports how rubbish they are with their similar SSP infestations. If only there was a spray

 

[CharlieSpotted]

On SSP, I was surprised to see the other day that Brewdog have partnered with SSP to open a bar in Gatwick Airport. Suspect it will be the first of many to come now they're in cahoots.

 

[The exile]

This is something raised eight months ago with the ORR which, for passengers is essential to ensure they have a choice and not be ripped off by SSP.

In the main the problem seems to be mostly at Network Rail Major Stations who've allowed this for 20 years, and perhaps for stations with over 3 catering units a tenant maximum occupancy limit could be set at say 25% for SSP and all their related business.

Should lead the way and show airports how rubbish they are with their similar SSP infestations. If only there was a spray

Why not say that if more than three retail outlets no more than two owned by any one company (or linked entity) and one must be completely independent and locally owned. Rent to be a % of takings - lower for the independent.

 

[BlueLeanie]

Bring back Casey Jones!

Prior to their demise, the hottest thing on the planet was their (microwaved) cheeseburger. These days it's the McDonald's Apple Pie.

 

[Goldfish62]

I'm baffled how upper crust still survives in stations with its pure profiteering pricing model.

And generally disgusting food...

 

[fandroid]

It's disappointing that big stations like Reading, which was totally rebuilt relatively recently, has what looks like an SSP monopoly within the ticket barriers. There used to be some variety in the Brunel Arcade outside the barriers including the first ever Costa to open at a station! For a while, there was a great little very popular local outlet there, but it closed. I suspect due to the sheer hard work that was needed to keep it going.

The railway does sometimes look for local businesses. Based around Basingstoke and spreading up and down the SWR mainline was the Destino empire. It started as a trolley service at Basingstoke back entrance, and eventually had no less than four outlets at the station! Never a monopoly there as SSP kept a Pumpkin going too (now operating as a Starbucks franchise). Anyway, the pandemic hit Destino, but they're still there with only two outlets and fewer elsewhere.

 

[Goldfish62]

It's disappointing that big stations like Reading, which was totally rebuilt relatively recently, has what looks like an SSP monopoly within the ticket barriers. There used to be some variety in the Brunel Arcade outside the barriers including the first ever Costa to open at a station! For a while, there was a great little very popular local outlet there, but it closed. I suspect due to the sheer hard work that was needed to keep it going.

The railway does sometimes look for local businesses. Based around Basingstoke and spreading up and down the SWR mainline was the Destino empire. It started as a trolley service at Basingstoke back entrance, and eventually had no less than four outlets at the station! Never a monopoly there as SSP kept a Pumpkin going too (now operating as a Starbucks franchise). Anyway, the pandemic hit Destino, but they're still there with only two outlets and fewer elsewhere.

Agreed.

At least Costa is still there, but the Brunel Arcade has overall been ravaged by Covid. Even Boots has gone.

The other thing with Reading is that everything is closed by mid-evening, which is ridiculous for such a large and busy station.

 

[zwk500]

There should be a particular effort in attracting and retaining small, independent enterprises, such as the excellent little station buffet at Huddersfield, which unfortunately closed recently.

There should, although there are numerous examples of determined campaigns to keep shops open that then close because of lack of custom.
Fundamentally, if station retail is to survive it is the customers who will have final say over what form it takes. No point demanding TOCs appoint local smallholders if nobody buys anything from them. Equally if customers use small independent shops and shun the chains like upper crust, guess what TOCs will look for.

 

[yorksrob]

Bring back Casey Jones!

Prior to their demise, the hottest thing on the planet was their (microwaved) cheeseburger. These days it's the McDonald's Apple Pie.

And KFC baked beans. Generally hotter than the Sun

There should, although there are numerous examples of determined campaigns to keep shops open that then close because of lack of custom.
Fundamentally, if station retail is to survive it is the customers who will have final say over what form it takes. No point demanding TOCs appoint local smallholders if nobody buys anything from them. Equally if customers use small independent shops and shun the chains like upper crust, guess what TOCs will look for.

I expect it was covid, followed by the strikes and TPE debacle that did for the buffet at Huddersfield, rather than an expression of customer preference.

 

[zwk500]

I expect it was covid, followed by the strikes and TPE debacle that did for the buffet at Huddersfield, rather than an expression of customer preference.

Quite possibly, it wasn't a specific note at Hudds, just a general observation.

 

[Bartsimho]

I know at Chesterfield that there used to be a Pumpkin however EMR let a more local company Cawa have the unit next to them. Safe to say only Cawa exists now and what was the Pumpkin is a Newsagents now.
As the station only has 2 units its fair to say the more local company can outcompete the franchise under the correct circumstances.

Cawa also have an outlet in Nottingham which is before the gateline

 

[Thirteen]

Brent Cross West is looking for a local business to run the concession at the station,

TfL still haven't managed to find someone to run the retail unit at Battersea Power Station.

 

[stj]

Greggs in every Station!

There should be a particular effort in attracting and retaining small, independent enterprises, such as the excellent little station buffet at Huddersfield, which unfortunately closed recently.

Same in Weston Super Mare

 

[Dr Hoo]

I know at Chesterfield that there used to be a Pumpkin however EMR let a more local company Cawa have the unit next to them. Safe to say only Cawa exists now and what was the Pumpkin is a Newsagents now.
As the station only has 2 units its fair to say the more local company can outcompete the franchise under the correct circumstances.

Cawa also have an outlet in Nottingham which is before the gateline

Cawa, which claims Ukrainian roots, serves extremely good coffee and pastries at Chesterfield but it isn’t any cheaper than the chains typically are.

 

[Merseysider]

Greggs Bargain Booze in every Station!

FTFY

 

[paul1609]

I know at Chesterfield that there used to be a Pumpkin however EMR let a more local company Cawa have the unit next to them. Safe to say only Cawa exists now and what was the Pumpkin is a Newsagents now.
As the station only has 2 units its fair to say the more local company can outcompete the franchise under the correct circumstances.

Cawa also have an outlet in Nottingham which is before the gateline

Cawa, which claims Ukrainian roots, serves extremely good coffee and pastries at Chesterfield but it isn’t any cheaper than the chains typically are.

Was going to say recently did a one off visit to Chesterfield for football on a Sunday. Looked in the coffee shop at the station limited range, extortionate pricing walked out . Used M&S in Charing Cross later.

 

[yorksrob]

Same in Weston Super Mare

Only been there a couple of times, however it struck me as the sort of station and locality where a cafe/buffet should do well !

 

[CyrusWuff]

Back in National Express days, the coffee shop at Chesterfield was operated by an in-house team and branded MMs Bar, matching the on-board catering offer on MML.

Similar with the café at Wrexham General whilst Wrexham & Shropshire were operating.

 

[Towers]

I read elsewhere that Great Malvern’s delightful Lady Foley’s Tearoom has recently closed, which is a great shame if true. Any thoughts of whether this was the choice of the owner or a move by the TOC concerned?

 

[zwk500]

I read elsewhere that Great Malvern’s delightful Lady Foley’s Tearoom has recently closed, which is a great shame if true. Any thoughts of whether this was the choice of the owner or a move by the TOC concerned?

To quote from the Malvern Gazette:

The plans to close the cafe have been attributed to a number of factors - lack of customers, the knock-on effect of the train strikes, the disruption caused by restoration work to the station by Network Rail, fewer people using trains because of the high price of tickets and the more general impact of the cost of living on household budgets.

 

[Horizon22]

Yes whilst retail variety might be beneficial, there are a number of factors impacting it.

One is space, especially at the 47% that only have a single outlet; there might not be somewhere practical to put another one. Secondly - but linked - is if the station is near even a small commercial centre (likely) there might be a Tesco or a Starbucks or a Greggs round the corner anyway that people would rather use before coming into the station.

People are used to larger brands, so actually having those in stations might be preferable; if you look at the design of large new stations now the general customer experience is for the station environs to be a destination in itself and blend into the overall area.

Independent shops are very nice but subject to some severe pressures; the cost of living crisis, and reduced passenger loadings (to some extent), electricity/gas prices and also reasonably high rents for stations as TOCs/DfT try to squeeze every bit of income they can. Also passenger flow in certain places can be quite variable; stations which cater to the London & SE commuter base might have a peak where a coffee shop does well but gets limited footfall the rest of the day.

I am sure that those looking to set up a independent retail operation look long and hard before they choose to do so. On the other hand, anything that breaks the poor quality/value SSP retail offerings at larger locations is always welcome!

 

[GuyGibsonVC]

Morpeth has a lovely little independent cafe in the recently refurbished station which is popular with locals.

They've had a bit of a rough 18 months or so with industrial actions, storms and Plessey Viaduct but, thankfully, they are still going strong.

Lovely coffee, a loyalty card and discount for rail staff.

 

[Travelmonkey]

Greggs in every Station!

I wouldn't mind it they have one at derby although I do confuse the gatline staff when niping out the ticketed area to use it,

I do prefer the smaller traders on stations like the Bod cafebar at stoke or the drlightfull but tiny coffee shop on Lichfield trent valley, I do think with stations of a larger nature we are plauged with the same haunt motorway services get, fast food at inflated prices, really we need an agitator similaar to Tebay in the railway market,

Aside to the point a good model could be like some of the tyne & wear metro stations on the coast loads of great independent bars & shops especially at Tynemouth,