Upper Crust owner predicts sales down 86% as Covid hits travel

The owner of Upper Crust and Caffè Ritazza has said it will achieve only a quarter of last year’s sales because of the impact on its railway and airport outlets from the shift to working and restrictions on travel.

SSP Group, which is planning to cut up to 5,000 jobs in the UK after heavy losses during the coronavirus lockdown, said just under a third of its 2,800 outlets worldwide had reopened so far as passenger numbers remained low at train stations and airports.

Trading is better in continental Europe, where weekly sales are approximately 66% down year on year as rail travel has recovered in France and Germany. In the UK, North America and elsewhere weekly sales are down by more than 80%.

The group, which operates in 35 countries, said the slow return to commuting and business travel, especially in the UK, meant sales for would fall by £1.3bn, or 86%, for the year to the end of September, worse than the 80% fall predicted in March.

Expected underlying losses of about £155m will be in line with expectations after the group preserved cash, partly by agreeing rent waivers or turnover-based deals with landlords.

Simon Smith, the chief executive of SSP, said: “Covid-19 continues to have an unprecedented impact on the travel industry and on SSP’s businesses in all geographies.”

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He said there had been some improvement in demand since the height of the crisis, when sales fell by 95%, and that the group would reopen outlets if and when demand was sufficient, as it managed cash flow tightly. About a third of its outlets have now reopened.

Smith said: “In the medium term we expect to see the gradual return of passenger travel to more normalised levels. The actions we are taking to rebuild the business will enable us to emerge fitter and stronger, positioning us to capitalise on future opportunities and delivering long-term sustainable growth for the benefit of all our stakeholders.”

Analysts at Stifel said the travel sector was likely to see lasting change in the light of the pandemic. More working from home and less commuting is likely to mean fewer passengers at railway stations, while airports are not expected to recover until 2024, with business travel particularly under pressure.

However, Stifel predicts that SSP could be a winner in a tough environment as weaker players fall away. “These trends are likely to drive market consolidation, with best-in-class players like SSP well-placed to take share,” said analyst Mark Irvine-Fortescue in a note.