UK rail passengers 'paying higher food, drink prices at stations'

Britain's rail regulator has launched a probe into railway station catering, saying hard-pressed passengers are paying more for food and drink while travelling than at high street shops and there were barriers to new market entrants due to old lease laws.

The Office of Rail and Road (ORR) also said satisfaction with the station catering offering "is low in some instances" and there were potential issues around underinvestment in catering outlets at stations.

"We have noted a high degree of concentration and low degree of churn amongst catering outlets at stations and simultaneously of difficulties for new companies to enter the market. Prices for food and beverages sold at stations are often higher than their high street counterparts," it said.

The ORR said talks with station operators indicated that in some instances they also have faced "significant barriers" to improving the retail offering at their stations, with limited options to renegotiate or end leases and renew on more competitive terms due to a 1954 law that grants business security of tenure.

"Such protections grant a statutory right to have their tenancies renewed on expiry. This type of contract limits the pressure from new entrants in any given station while at the same time protecting incumbents’ businesses," the ORR said.

The main operators in the railway food retail market include Caffè Nero, Pret a Manger, McDonald’s, Costa Coffee, Burger King and SSP, which operates brands including Upper Crust, Camden Food Co and Ritazza.

Conservative estimates suggest annual passenger spending on food and drink is well in excess of £1bn and wanted to ensure the industry "gives customers good value for money and improves their journey experience".

"We want to make sure that the market is working as well as possible for passengers. As part of its study to understand potential issues, including barriers for new entrants, ORR has started to gather intelligence on the structure of the market, the effectiveness of competition and outcomes for consumers," the regulator said in a statement.

"The cost of living crisis puts pressure on consumers, including passengers. As consumers across the country are affected by the rising cost of living, we want to ensure that passengers are getting affordable food and beverages when using station facilities."

Reporting by Frank Prenesti for Sharecast.com