Upper Crust owner reviews struggling European rail operations

 Upper Crust owner SSP Group has launched a review of its struggling European rail business, sending shares sharply higher on Thursday. The FTSE 250 company, which operates outlets in railway stations and airports under brands including Caffè Ritazza, said it had begun a “wide-ranging review” with consultancy Alvarez & Marsal that would consider “all potential options” to address its underperformance.

SSP, which also operates M&S Simply Food and Burger King franchises, has struggled to recover as rail travel remains lower than pre-pandemic levels. “We acknowledge there is more to do to strengthen our operational performance, most notably in continental Europe where we have now reset our team, model and balance sheet, and have a range of initiatives under way to do so,” said chief executive Patrick Coveney.

The group has come under pressure from activist investors, including New York-based hedge fund Irenic Capital Management, to boost its profit margins.

Shares jumped more than 15 per cent to £1.71 in morning trading in London but are down by 44 per cent over the past five years. The group said it would update shareholders on the outcome of its review by May 2026.

Current trading indicated “an acceleration in performance” that, along with cost-cutting measures, offered “confidence in the outlook despite continued challenges in continental Europe”, said Anna Barnfather, analyst at Panmure Liberum.

SSP said on Thursday that revenues rose 7.8 per cent to £3.6bn in the year to September, while operating profit increased 12.7 per cent to £223mn. The continental Europe division posted a £47.9mn operating loss due to factors including £90.3mn of impairment charges. Revenue rose 0.5 per cent on a constant currency basis, while underlying operating profit rose 8.4 per cent to £42.4mn.

The operating margin in Europe was 2.2 per cent, falling short of a 3 per cent target set last December. SSP blamed weak performance in France and Germany “driven in part by the scale of the interventions we deemed necessary to deliver a sustainable improvement” and had a “revised plan” to achieve its target next year.

Irenic has been trying to drum up interest in a take-private deal for SSP, which it says could be valued at a 50 per cent premium to its market value. The hedge fund earlier this year shared materials about the merits of a buyout with investment bankers and private capital groups.

This article was published by the Financial Times