Upper Crust owner SSP pins hopes on hungry leisure travellers

The travel food retailer that owns Upper Crust and the Caffè Ritazza brands has said leisure demand will make up for permanently lower levels of business customers despite a strong bounceback in commuting in recent weeks.

SSP, which on Tuesday issued short-term financial guidance for the first time since the pandemic started, said that sales were “slightly better than expectations” partly because of the number of customers travelling for leisure and spending more time and money in airports and stations.

It estimated that full-year revenues would be between £2bn and £2.1bn, in line with analysts’ forecasts.

SSP’s comments were echoed by Wagamama owner The Restaurant Group, which said on Tuesday that a stronger than expected recovery in its travel concessions was offsetting increased food and drink costs.

Companies reliant on office workers travelling into cities and around the world for meetings were hit hard by the pandemic. But several have said that more people returning to offices than expected in recent weeks, and spending more when they do return, has boosted revenues to near 2019 levels.

Jonathan Davies, SSP’s chief financial officer, said the group had benefited from more even trading patterns throughout the day: “There isn’t quite the same rush hour peaks of demand that we used to see, when frankly keeping the queue down was a challenge.”

SSP, which operates in 36 countries, said that revenues in the past six weeks had returned to 83 per cent of comparative pre-Covid levels. Despite the impact of the Omicron variant during the northern hemisphere winter, it achieved sales of £803.2mn in the six months to the end of March, 64 per cent of 2019 levels.

It also narrowed its pre-tax losses to £2.3mn, compared with a £300mn loss in the first half of 2021.

More than 2,200 of its 2,700 travel units, which also include Burger King and Starbucks stores operated under licence, are now open although it is managing opening hours according to levels of footfall, it said.

The group’s new chief executive Patrick Coveney, who joined the company this month from catering group Greencore, said SSP had benefited from strong demand for air travel, particularly short haul and domestic flights by holidaymakers. “Our judgment would be that over time that will fully compensate for any structural shift in long haul or business travel,” he said.

SSP estimated that in the long term rail travel would return to between 90 and 95 per cent of pre-Covid levels.

The company said that it had not done “anything out of the norm” in terms of raising prices to cope with inflation, with Coveney adding that the company was “very conscious that consumers are being squeezed”.

The Restaurant Group said that it expects food cost inflation of between 9 and 10 per cent for the full year, up from its previous estimate of 5 per cent.