Rail station prices investigated over fears of food and drink rip-off

Rip-off food and drink prices at railway stations are being investigated by regulators amid fears retailers are forcing passengers to pay extortionate amounts for everyday essentials.

Rail passengers, already suffering after a year of disruption from strikes,^[1] are spending more than £1bn every year on everything from bottled water to burgers.

The Office of Rail and Road (ORR) said that “preliminary research and investigations” had identified significantly higher prices in stations compared to the high street.

The regulator has now launched a full investigation into how passengers are paying over the odds.

Grahame Horgan, ORR’s head of competition, said: “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.

“It is important that the railway industry gives consumers good value for money and improves their journey experience.”

Many passengers have long complained about higher prices in railway stations compared with nearby high streets.

WHSmith is likely to be put in the crosshairs of the regulatory inquiry,^[3] City analysts said.

Roughly 20pc of WHSmith’s travel sales are generated in UK railway stations and about one-third of those revenues come from food and beverage.

Peel Hunt analysts said: “Investigations like this are not good for sentiment but rail is small in the grand scheme of things. There is also a large amount of competition in the areas in which WH Smith trades. The same can be said of Greggs.”

The ORR refused to disclose the outcome of their preliminary research, but it is thought that there is a groundswell of evidence that shows travellers are being forced to pay higher prices.

In November last year, Greggs were exposed by the Oxford Mail for charging £1.45 for a sausage roll in the bakery chain’s new Oxford railway station outlet, compared with £1.15 on the nearby high street – an uplift of more than 25pc.

The inquiry is thought to be the first into prices for food and beverages at railway stations. It follows an outcry in recent years over motorway service stations taking advantage of captive shoppers^[4] to ramp up prices.

Local media reports in 2019 found that Beaconsfield services in Buckinghamshire were charging an extra £1.85 for a 500ml bottle of water than the average supermarket cost of £1.67.

Meanwhile, a standard basket of sweet and savoury snacks and drinks cost £16.21 at Durham services compared with £6.89 in supermarkets, according to the North-West Evening Mail.

In its “state of scope” published today, the ORR said: “Preliminary work which we have carried out suggests that from a passenger perspective: (a) Prices for food and beverages sold at stations are often higher than their high street counterparts. (b) Satisfaction with the station catering offering is low in some instances. (c) There may be issues around underinvestment in catering outlets at stations.”

Interested parties have been given until July 7 to submit responses to a list of questions published by the inquiry.

A spokesman for the ORR added: “As an independent regulator, we conduct preliminary research and investigations into various aspects of the railway station catering market. At this stage, it is our policy not to disclose or provide specific details regarding price differentials or evidence from preliminary research. We believe in maintaining the confidentiality of data and protecting the integrity of our ongoing investigations.

“Our commitment to transparency remains unwavering. As our investigation progresses and reaches official stages, we will share relevant and official information in accordance with our regulatory obligations. This ensures that the information we provide is accurate, reliable, and based on a thorough analysis of the market.”

References

1. ^{^} already suffering after a year of disruption from strikes, (www.telegraph.co.uk)
2. ^{^} Rail strikes poll 27.04.23 (cf-particle-html.eip.telegraph.co.uk)
3. ^{^} WHSmith is likely to be put in the crosshairs of the regulatory inquiry, (www.telegraph.co.uk)
4. ^{^} motorway service stations taking advantage of captive shoppers (www.telegraph.co.uk)
5. ^{^} 1406 food inflation (cf-particle-html.eip.telegraph.co.uk)