Profits at Upper Crust owner SSP back above pre-Covid levels

An operator of restaurants and cafés in railway stations and airports around the world said full-year profits had topped pre-Covid levels for the first time since the pandemic.
SSP, which runs outlets such as Upper Crust and Caffè Ritazza, reported annual adjusted profits of £343 million in the year to the end of September, up from £280 million last year and above the £326 million reported in 2019.
Growth in three of its four markets offset a disappointing performance in continental Europe, where operating profits fell 49 per cent to £18 million on sales that were up 6 per cent to £1.21 billion.
Trading in continental Europe was hit by strikes in the railway sector and weak motorway service trading in Germany. Last December, SSP began a phased exit of its loss-making motorway services business in the country, which reported an underlying loss of £3.8 million for the year.
SSP said industrial disruption on European railways — along with the cost of extra staff hired to meet higher volumes which never materialised during the Paris Olympics — had made a significant dent to profit in the region.
The FTSE 250 company has set out a five-point recovery plan to address performance in continental Europe. It plans to increase operating profit margins in the region to 3 per cent in the 2025 financial year from 1.5 per cent, rising to 5 per cent in the medium term.
Along with a more streamlined management structure and disciplined management of the German motorway service business, the plan also includes cost reductions and optimising the performance of new units.
Patrick Coveney, chief executive of SSP, said: “We’ve opened a huge amount of new units across Europe. In the last two years, about 40 percent of our bars and restaurants have been renewed and that means rebuilt in almost every case. So we’ve got an important job to get the performance of those new units up to a mature level.
“The European economy and particularly the German and French economies are under pressure and so we do have to lean into cost reduction and productivity improvements, because the macro environment is tougher in those markets than in other parts of the world.”
At the pre-tax level, profits rose 35 per cent to £119 million on revenue up 14 per cent to £3.43 billion.
Shares in SSP closed up 15½p, or 9.6 per cent, at £1.77¾ on Tuesday. Despite the recovery in earnings and profits, the shares still trade at a substantial 73 per cent discount to the 600p they touched before the outbreak of Covid-19. The former stock market darling tapped shareholders for more than £700 million during the pandemic.
Performance in the UK and Ireland was better than expected, with like-for-like sales rising 11 per cent to £893 million and operating profits up 26 per cent to £73 million.
Sales in North America rose 6 per cent to £814 million on operating profit up 47 per cent to £81 million. In Asia Pacific, eastern Europe and the Middle East, sales increased 17 per cent to £519 million and operating profits rose 20 per cent to £76 million.
SSP operates about 3,000 outlets at 625 airports and railway stations in 37 countries. It deploys a large number of brands, including its own concepts such as Upper Crust, Caffè Ritazza and Camden Food Co, plus third-party franchises such as Burger King, Yo! Sushi and Starbucks. It has 49,000 employees.
Due to the company’s global reach, currency headwinds also remain a challenge with all sales outside the UK converted into sterling. The overall impact of the movement in currencies in 2024 compared with 2023 led to a 2.5 per cent decrease in sales and a 5.8 per cent hit to operating profit.
The company said that for 2025, it was expecting like-for-like sales growth of between 4 per cent and 5 per cent with a further contribution to sales from already completed acquisitions and a slight negative impact from the continued exit of the German motorway services division.