European Airport Catering: Market Insight Report 2014

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Published: January 2014
Pages: 35
Format: PDF Download

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Description

About this report

NB this is an old report which we have not updated in the last couple of years. Let us know if you would be interested in a new version.

This market covers the operation of restaurants and catering facilities in airports across Western and Eastern Europe, excluding Russia and Turkey. It does not include duty free and other store-based retailing at airport sites or the provision of food on-board planes by airlines.

We quantify the market size, historical growth rates, while reviewing key factors behind these figures.

We also carry out an in-depth analysis of the relevant drivers of industry growth – including the macroeconomic environment, the trends in passenger volumes and the impact of other factors such as airport privatisation and commercialisation, enhanced airport security and the growth of low-cost carriers – setting out historical trends and available forecasts.

Our forecast for industry growth is based on this analysis of historical trends and growth drivers.

Why is this report interesting?

The European airport catering market was hit by the downturn in the global economy and hence passenger volumes following the onset of the credit crunch in 2008.

It has since recovered strongly.
– Passenger volumes have bounced back to exceed pre-crisis levels in most countries.
– Ongoing privatisations and other commercial imperatives mean there is an increasing appetite on the part of more airport owners and operators to maximise the commercial returns on their assets
– Catering operators have continued to innovate their formats and their use of brands to maximise the appeal of their offerings to passengers.

In contrast to the increasing maturity of much of the contract catering sector, airports now appears to be a segment with attractive growth prospects. The key challenge for catering operators is to deliver ongoing improvements in performance so that they can earn returns in excess of what they need to pay to their two strategic suppliers: the owners of their high-footfall sites and high-performing brands.

The market has seen corporate activity in the recent past with a major demerger and re-organisation at one of the leaders, Autogrill, in 2013. However, sales processes considered by private equity investors at two other market leaders, SSP and Elior, did not lead to successful exits hence many in the industry expect to see further activity.

Who is it useful for?

The report is intended for:
– Operators of airport catering businesses
– Airport operators
– Investors in these businesses
– Potential new entrants to the airport catering market
– Market regulators and policymakers
– Banks, analysts, consultants and other parties with interests in the sector.

What are the sources and methodology?

This report is based on
– Publicly available data including company annual reports, websites, press releases and government statistics
– Interviews with senior-level contacts in the market
– In-depth analysis of the macroeconomic environment and relevant market drivers such as trends in passenger volumes, airport privatisation and commercialisation and catering formats.
– Our own experience of carrying out commercial and operational due diligence on behalf of parties considering investing in airport catering and other adjacent sectors.

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

Summary

Market context
The airport catering market consists of restaurants, bars and cafes operated within airport terminals.
The industry has some attractive characteristics. Captive customers, who are skewed towards higher income groups, spend significant time in the airport building, unable to eat elsewhere. Hence prices are generally higher than the high street with sales per square metre up to four times normal levels.
However, airports represent a demanding environment in which to operate catering business with challenges including dispersed international networks, security and space restrictions, requirements to run operations on a 24/7 basis, significant daily and seasonal variations in customer volumes and time-pressured customers.
Although there are 600 airports in Europe with more than 15,000 passengers per year, the largest airports are very important to the sector. The top 15 account for around 40% of total passenger volumes and the catering revenues of a single large hub airport are in excess of €100m.

Market trends
Key trends include
– Demand from customers for healthier food.
– Growth of low-cost airlines leading to fewer passengers waiting for a free meal on their flight.
– Increasing commercialisation of airports with airport operators looking to earn more money from non-aeronautical sources such as catering, both by giving caterers more opportunities and charging high rents.
– Increasing importance of strongly-branded offers which are capable of achieving higher sales levels.
– Changes in the amount of time passengers have at the airport from factors such as enhanced security operations and on-line check-in.

Market size and growth
The market is now well over €2bn in size, having grown rapidly in recent years. It has been driven by both:
– Increases in the number of passengers using European airports, which has bounced back strongly since a post-credit crunch dip in 2009.
– Spend per passenger trends, which have also shown growth over this period.
The largest markets are in northern Europe with the UK and, relative to their population, the Nordic countries being particularly prominent.

Competitive landscape
The market is supplied by a combination of specialist concessioners with portfolios of in-house and licensed brands, branded food service groups and other catering providers.
The three main concessioners are
– SSP, based in the UK, which is the market leader overall with particularly strong positions in the UK and Nordic countries. It has further operations in the Middle East and Asia as well as extensive railway station catering interests.
– Autogrill, based in Italy which is market leader in Italy and has major operations at Amsterdam’s Schiphol airport. It also has large concession catering interests in other areas being market leader in both airport catering in the US, following its acquisition of HMSHost, and motorway catering in Italy.
– Elior, one of the leading contract catering groups in Europe which operates airports as part of its Concessions division, and is market leader in Spain and France.
– While many leading foodservice brands, such as Burger King, Starbucks, Pizza Hut and Quick, operate by licensing their brands to the concession operators, others, such as McDonalds, Subway, JD Wetherspoon and Pret a Manger operate outlets directly rather than via concessions groups.
Smaller / independent operators are more common at smaller regional airports.

Outlook
Our forecasts are for the market to continue grow in the next five years, encouraged by strengthening European economic performance, growing numbers of passengers, and continued innovation and quality improvements on the part of operators leading to increased spend per passenger.
We expect growth to be fastest in Eastern Europe, as those markets catch up, and slowest in Southern Europe, where economic conditions remain more challenging – although holiday travellers provide an element of protection. Northern European markets will remain the largest.

Contents

About this report - 2
Summary
About Apex Insight
Contents
List of charts and tables

Airport Catering market context - 7
Market definition
Importance of major airports
High value sites
Challenging operating environment
Peak times
Seasonality
Airports are time-pressured environments
Structural attractiveness

Key market trends - 10
Market trends
Healthier food
Growth of low-cost airlines
Commercialisation of airports
Increasing importance of branded offers
Time spent at the airport

Market size and growth - 15
Number of passengers
Spend per passenger
Passenger Mix
Perceived quality of offer
Price and perceived value for money
Time spent at the airport
Spend levels
Source: ACI
Market size

Country markets: size, growth and characteristics - 20
Overview
Country market characteristics
UK / Ireland
Germany, Switzerland and Austria
France
Italy
Spain / Portugal
Nordics
Benelux
Eastern Europe

Competitive landscape - 24
Concessionaires
SSP
Autogrill
Elior
Branded food service groups
Others

Forecasts - 29
Economic forecasts
Passenger numbers
Spend per passenger
Market forecast
Forecast by country
Risks to the forecast

Appendix - 34

List of figures (European Airport Catering Market Insight Report 2014)

1.   Number of airports with more than 15,000 passenger movements per year in 2011
2.   The biggest airports in Europe by PAX numbers in 2012
3.   Seasonality – number of passengers in Europe in 2012 by month / m
4.   Number of low-cost airline passengers / m
5.   Global airport sales breakdown by services
6.   Heathrow airport revenue breakdown by services
7.   Average waiting times at European airports / minutes
8.   Number of passengers in Europe / m
9.   Europe passenger numbers/GDP growth
10.  Passengers by country
11.  Growth in passenger numbers vs growth in GDP
12.  Average spend per passenger by country / €
13.  European airport catering market size and growth by country / m€
14.  Number of passengers in Europe / m
15.  Europe passenger numbers/GDP growth
16.  Variation in spend per passenger with dwell time
17.  Spend per passenger / €
18.  Spend per passenger in North America for F&B at airports / €
19.  Heathrow catering income per passenger / £
20.  European airport catering market share
21.  SSP 2012 revenue by segment / €m
22.  Autogrill F&B revenue by segment / €m
23.  Elior revenue by segment in 2012 / €m
24.  GDP forecast
25.  Passenger numbers forecast / m
26.  Passenger numbers vs GDP forecast
27.  Spend per passenger forecast / €
28.  European airport catering market size forecast / €m
29. Forecast by country / €m

Companies mentioned in this report

Areas
Autogrill
BAA
Caffe Nero
Compass
Delaware North
Elior
Heathrow Airport Limited
HMSHost
J D Wetherspoon
Pret a Manger
SSP
TRG Concessions
World Duty Free

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