MIDAS SHARE TIPS: Food outlet firm SSP to really fly at new airports abroad 

By Joanne Hart, Financial Mail on Sunday

Updated:

Over the past three months, millions of holidaymakers have spent hours at airports and railway stations across Europe and beyond.

Arriving early, waiting for delayed flights or whisked through security faster than expected, they have mostly whiled away their time, shopping, eating and drinking.

Many will have eaten or drunk at restaurants, bars and cafes operated by a company few people have ever heard of: SSP. Floated in July 2014, it runs about 2,000 outlets at 124 airports and 270 stations worldwide.

Going unnoticed: Many will have eaten or drunk at restaurants, bars and cafes operated by a company few people have ever heard of: SSP

Going unnoticed: Many will have eaten or drunk at restaurants, bars and cafes operated by a company few people have ever heard of: SSP

Some brands belong exclusively to the group, such as Millie’s Cookies, Upper Crust and Caffè Ritazza. 

But in many cases, SSP uses a franchise model, running sites for well-known names such as Nando’s, Burger King, YO! Sushi and Starbucks and paying these companies a royalty in return. SSP was also the first to open an M&S Simply Food outlet in a travel location – Liverpool Station in 2001. Now it runs stores around the country in stations, airports and hospitals.

The group works with small chains, local cafes and individual restaurateurs, too, so that eateries in airports and stations are not entirely uniform.

Run by Kate Swann, former chief executive of WH Smith, SSP shares are 303p. They have done well since flotation but should continue to flourish. Swann, who was credited with turning round Smiths, joined SSP just two years ago. Since then, she and her team have constructed a strong plan to expand the company.

SSP was initially part of catering giant Compass and built its reputation as an operator of fast-food joints in railway forecourts. It was sold to a Swedish private equity firm in 2006 and expanded over the next eight years, moving into more stations and airports while increasing the number of different outlets it manages.

Today, it has about 300 brands. In line with changing consumer tastes, many are considerably more upmarket than the burger and sandwich outlets of a decade ago, serving healthier, premium food. SSP even runs a Michelin-starred restaurant in Hong Kong airport, Hung’s Delicacies.

Even so, it still derives 40 per cent of its revenues from the UK, with 44 per cent coming from the Continent. The US and Canada account for about 10 per cent while Asia and the Middle East make up the rest. This is where much of the growth potential lies.

North America has traditionally been dominated by one large operator, but SSP has muscled in, moving in to prestigious airports such as JFK in New York. It also won contracts in Texas, Florida and Montreal in the first six months of this year.

In Asia, even though China is not growing as fast as it once was, passenger numbers are still rising by 6 to 8 per cent annually and the country plans to open 70 new airports over the next ten years.

New venture: SSP is run by former W H Smith boss Kate Swann

New venture: SSP is run by former W H Smith boss Kate Swann

All those new travellers will need to be fed and watered, so hundreds of bars, cafes and restaurants will be built, many of which will be run by external operators. SSP has been investing in its Asian business and recently won a £60 million contract to run eight new outlets at Beijing Capital International airport.

The Middle East offers plenty of room for growth, too, particularly the Gulf States, where air travel is increasing rapidly. 

Closer to home, the company won a seven-year contract at the newly-revamped Stansted Airport, including the first ever airport restaurant from celebrity chef James Martin, the James Martin Kitchen.

SSP’s financial year runs to September 30 – last Wednesday – and the results will be revealed in a few weeks’ time. Sales of about £1.8 billion are expected, in line with last year, after being hit by the strength of sterling against the euro and Scandinavian currencies. 

But profits should still show strong growth, rising about 25 per cent to £78million and a further 14 per cent to £89million in 2016. A dividend of 4.2p is expected this year, rising to 4.75 next.

Swann is keen to make the company more profitable by sourcing food and drink more efficiently, making sure staff are on site when needed and using consumer data to find out more about people’s preferences.

Midas verdict: SSP shares are 297½p and should deliver long-term rewards. Air travel is increasing and SSP is working hard to make sure it reaps the benefits. Buy.

HOW SWANN SPREAD HER WINGS 

Kate Swann is a rare beast: a very well paid, internationally respected businesswoman.

Having started her career at Tesco as a graduate trainee she worked her way up the retail ladder to become managing director of Homebase, before taking the same position at Argos in 2000. Three years later she was appointed chief executive of W H Smith.

The business was on its knees, but Swann turned it round by cutting costs, moving away from less profitable goods such as CDs and DVDs and expanding into airports.

From there SSP was a natural progression, though ironically she admits to a fear of flying. For investors this minor phobia matters less than Swann’s forensic attention to costs and profits. Disciplined and with a retailer’s attention to detail, she is described as driven, forceful and dynamic.

Despite her success she has not been immune from controversy, largely centred on the amount of cash she manages to extract from the firms where she works.

Having put away millions while at W H Smith, Swann’s total remuneration at SSP was a generous £4.5million last year.

Aged 51, she is married with two daughters and recently became chancellor of the University of Bradford, where she graduated 31 years ago.


Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos