Food-to-go retailers are passing on price rises to customers, pushing up the cost of a cheap lunch just as commuters start to return to offices in greater numbers.
Greencore, the UK’s largest sandwich maker, said on Tuesday that demand had returned to 91 per cent of pre-pandemic levels even though the company was passing on the “vast majority” of cost increases to its retail customers.
SSP, which owns station and airport outlets such as Upper Crust and Caffè Ritazza, said that while it was protected from some of the current inflationary pressure because of long-term contracts, it was inevitable “there will be upward pressure on prices”.
Companies reliant on office workers travelling into cities and around the world for meetings were hit hard by the pandemic and are now facing a tough recovery as food, labour and energy costs rise sharply.
Several have said, however, that more people returning to offices than expected in recent weeks, and spending more when they do return, has helped sales improve to near 2019 levels.
Wagamama owner The Restaurant Group said on Tuesday that a stronger than expected recovery in its travel concessions was offsetting increased food and drink costs.
Sales across its travel outlets, which include sites at London’s Gatwick and Heathrow airports, were 11 per cent below 2019 levels in the three months to May 15, it said. But it warned food price inflation was likely to hit between 9 and 10 per cent this year, up from its previous estimate of 5 per cent.
Greencore said that to manage rapidly rising costs it was trying to source cheaper alternative ingredients and was making some redundancies but declined to comment on how many.
SSP, which on Tuesday issued short-term financial guidance for the first time since the pandemic started, said sales were “slightly better than expectations” partly because of the number of customers travelling for leisure and spending more time and money in airports and stations.
It estimated that full-year revenues would be between £2bn and £2.1bn, in line with analysts’ forecasts, as it bet on higher demand from leisure customers counteracting permanently lower levels of business travel.
Jonathan Davies, SSP’s chief financial officer, said the group had also benefited from more even trading patterns throughout the day. “There isn’t quite the same rush-hour peaks of demand that we used to see, when frankly keeping the queue down was a challenge,” he said.
Greencore, which returned to profit in the six months to the end of March, noted a more even distribution of sales between city centres and suburbs.
SSP, which operates in 36 countries, said revenues in the past six weeks had returned to 83 per cent of comparative pre-pandemic levels. Despite the impact of the Omicron variant during the northern hemisphere winter, it achieved sales of £803mn in the six months to the end of March, 64 per cent of 2019 levels.
It also narrowed its pre-tax losses to £2.3mn, compared with a £300mn loss in the first half of 2021.
More than 2,200 of SSP’s 2,700 travel units, which also include Burger King and Starbucks stores operated under licence, were now open, although it was managing opening hours according to levels of footfall, it said.
The group’s new chief executive, Patrick Coveney, who joined the company this month from Greencore, said SSP had not done “anything out of the norm” in terms of raising prices to cope with inflation, adding that the company was “very conscious that consumers are being squeezed”.