The rail regulator has fired a warning shot at purveyors of overpriced pasties and baguettes on Britain’s stations, suggesting that captive passengers are paying 10% over the odds in a stagnant market.
Passengers can buy food at around one in five stations, spending about £700m a year in outlets that bring in about £100m annually for Network Rail and train station operators in rent.
But in many stations a lack of open competition has enabled the same outlets to stay in place with leases rolled over, driving up the price of food and drink, according to the Office of Rail and Road.
The ORR said more competition was crucial, with nearly half of the rail stations that offer catering having space for only one outlet.
The prices paid by customers at stations were often higher than the high street equivalent, it added: “This price premium can vary considerably by retailer but an approximate estimate of the average price premium is in the region of 10%.”
Rail passengers got off relatively lightly, however, compared with those eating at franchises in airports or motorway service stations, a “mystery shopper” exercise for the ORR found.
Much railway station catering space is leased in bulk to one group, Select Service Partners (SSP), a multinational whose own brands include Upper Crust and Millie’s and which also operates franchises of Burger King, Greggs and M&S Food in stations.
SSP’s share of all outlets is larger than that of the next six largest players combined, according to the ORR’s report.
The ORR’s director for economics, finance and markets, Will Godfrey, said: “The railway station catering market isn’t working as effectively as it should be. More competition between companies to operate at stations would bring real benefits to passengers and taxpayers.
“Because money earned from leases at stations ultimately makes its way back to those who operate railway stations and infrastructure, this is money that could be invested in improving services for passengers or reducing the need for taxpayer support.
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“We will now work with the industry on the best way forward and will make recommendations on how the market needs to change, with the ultimate goal of improving value and outcomes for customers and funders of the railway.”
SSP noted that the regulator had decided not to refer the sector to the competition watchdog. A spokesperson added: “SSP will continue to work with the ORR, including as regards to any recommendations ultimately made. We have always been, and will continue to be, committed to meeting the needs of consumers in this sector and providing them with value, quality and choice.”
The regulator has this week also warned seven online ticket retailers that they need to be more upfront about booking fees or finder’s fees that drive up the eventual fare for passengers.
