Report finds lack of competition is hitting rail travellers in the pocket

Temple Meads station

An investigation has found that there is a lack of competition when it comes to catering at rail stations.

The Office of Rail and Road found that the railway station catering market is not working as effectively as it should be.

The regulator said greater competition would lead to better value for passengers and for taxpayers.

ORR is investigating this sector because it believes that a more competitive market would provide better options for passengers and allow station operators to increase investment in the railway.

The regulator’s report found that outlets can stay in the same hands for extended periods because their leases are protected.

Those who run stations are not sufficiently incentivised to invite competition for outlets.

Even when unprotected leases come up for renewal, the most common practice is to roll over or extend the lease without an open competition.

Competition for outlets is a crucial factor across the market, because nearly half of all stations (47 per cent) with retail space have just one outlet.

These weaknesses in the station catering market also mean that station operators may have less income to invest in improving stations and services, increasing the need for taxpayer support.

ORR’s report finds that the features of the railway station catering market may also contribute to an average 10 per cent price premium at stations compared to the high street.

ORR’s investigation is continuing, and the next stage will focus on what recommendations should be made to government, station operators, funders and other stakeholders to improve the functioning of the market.

Will Godfrey, director of economics, finance and markets, said: “The railway station catering market isn’t working as effectively as it should be. More competition between companies to operate at stations would bring real benefits to passengers and taxpayers.

“Because money earned from leases at stations ultimately makes its way back to those who operate railway stations and infrastructure, this is money that could be invested in improving services for passengers or reducing the need for taxpayer support.

“We will now work with the industry on the best way forward and will make recommendations on how the market needs to change, with the ultimate goal of improving value and outcomes for customers and funders of the railway.”

Station catering retailers earned total revenue of around £700m in 2022/23.

Station operators earned a little over £100m in rental income from leasing outlets for catering services in 2022/23.

In total 2,367 railway stations fell within the scope of the ORR’s study. This includes all the mainline stations operated by Network Rail and train operators funded by the UK and Scottish governments.