BR sells off catering arm

PAUL RODGERS

The sale of On Board Services, British Rail's catering arm, to its management for pounds 11.5m will be announced today by the Department of Transport.

The buyout is backed 60-40 by Candover, a venture capital company, and the Bank of Scotland, with the seven-member management team putting up an undisclosed amount to fund expansion and improvement of the service.

John Jarvis, chairman of Jarvis Hotels, will join the OBS board as non- executive chairman, said Terry Coyle, the company's managing director. The newly privatised company is the third-largest supplier of packaged meals in Britain.

A flotation or trade sale is likely in three years, after current contracts with train operating companies have been renewed and an aggressive expansion programme put in place. OBS hopes to raise its sales from a projected pounds 37m in the first year to pounds 55m by 1998. Its pre-tax profits have been estimated at about pounds 2m.

Mr Coyle said growth would come from beefing up UK train catering operations with an airline-style service, opening retail outlets in the 33 railway stations where it currently has food preparation areas, and bidding for business on Europe's high-speed trains.

"We see our future moving further into Europe," Mr Coyle said. "With it's high-speed services it's very attractive." The European rail catering sector is dominated by Wagon Lits and Servair from France, Germany's Mitropa and Rail Gourmet, a subsidiary of Swissair.

British travellers will not be ignored, however, he insisted. In the future, passengers could find a hot meal, prepared on board and delivered to their seats, included in the ticket price. "You're going to see an increase in customer service," he said. A range of new products will also be introduced.

The sale puts to rest fears among traditionalists that the company would be sold to rival bidder Rail Gourmet, which was rumoured to believe scrapping English breakfasts would be a sound cost-cutting move.

Mr Coyle said the sale meant "the traditional British breakfast has been saved. It's the mainstay of the business."

OBS has 650 staff, but could increase that to almost 2,000 if it was successful in bidding for contracts to serve food on trains, part of the business that was largely kept separate from the privatisation.

OBS is one of the first fragments of British Rail to be privatised, which Mr Coyle believes will give it time to prepare services for the operating companies when they are sold off in six to12 months' time.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map