The FAB eZine
SSP plans selective reopening programme and focus on technology
SSP Group addresses its strategy for reopening around the world as business begins to slowly return. By Dermot Davitt.
Travel restaurateur SSP Group plans to reopen its operations selectively and accelerate the use of technology across its business in the post-COVID-19 period. Its comments came as it announced first-half results to 31 March. Revenues fell by -3.7% in the half but the crisis deepened quickly from April onwards; in that month only 10% of outlets remained open.
On the return to business, SSP says: “Our approach to re-opening units will be systematic, so that we deliver the brands and the offer that customers want to eat and drink in the way they want to be served. Importantly, we will look to open units selectively in the larger multi-unit locations, which characterise the majority of our business, and therefore ensure that we can operate profitably even at lower levels of footfall.
“We expect that during the re-opening phase profitability will be further supported by the removal of minimum annual guarantees and concession fee reductions, as well as simplifying our operations and agreeing lower franchise fees with our brand partners.”
SSP will reopen with profitable, multi-unit locations in mind (Daxing and Changi airports pictured)
It notes that rebuilding confidence among consumers will be vital. “We are doing that by implementing new hygiene and safety protocols and new operational and social distancing measures. Staff are being trained to deal with the new environment, and our visual signage clearly sets out the safety measures we have in place.”
Innovation will play a key role, SSP adds. “We will continue to use technology, accelerating our mobile order and pay functionality and trialling new technology, such as online delivery services.”
Despite the impact of the crisis, SSP pledges to continue seeking expansion opportunities, including through acquisitions.
“We already have a strong new business pipeline, and we believe new opportunities will emerge in the aftermath of this crisis. North America remains a significant growth market, and we will continue to invest to grow further. There may also be opportunities for new acquisitions in due course, which we will pursue if they meet our returns criteria.
“We will maintain a tighter cost base, focused on more simplified operations and use technology to eliminate manual tasks where most cost efficient, and finally, we will continue to embed sustainability within our operations.”
SSP says expansion remains high on the agenda, including via acquisition (Frankfurt Central station pictured)
SSP actions to preserve cash and protect staff and customers to date include the following:
- New health and safety protocols
- Offices closed and colleagues supported to work from home
- More flexible rent terms negotiated with clients
- Temporary closure of the majority of units; colleagues furloughed
- Salary reductions across senior management, Executive Committee and Board
- Discretionary spend and capital investment reduced to a minimum
- Share buyback programme suspended
- A dividend reinvestment equity offering of up to £26.8 million alongside today’s results, giving shareholders the opportunity to reinvest the proceeds of their 2019 final dividend payment into new SSP shares
- No interim 2020 dividend declared
- March equity placing completed and access to the Bank of England’s COVID-19 corporate financing facility scheme confirmed
- Waivers of existing covenant tests until September 2021
The company says that before the crisis hit, business had been performing in line with expectations, with new contract gains at Dublin, Cincinnati, Providence and Edmonton airports in the period.
CEO Simon Smith says: “COVID-19 has had an unprecedented impact on the travel sector. Our response has been to take quick and decisive action to protect our people and our business, while around the world our colleagues have helped and supported their local communities.
“Looking forward, and with sufficient liquidity to manage a pessimistic trading scenario, I believe the actions we have been taking during this crisis will make us a fitter and stronger business, well placed to deliver for all our stakeholders as the travel market recovers.”
The Moodie Davitt eZine
Issue 280 | 3 June 2020
The Moodie Davitt eZine is published 12 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail firstname.lastname@example.org