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
ebooksA special investigation by Andy McSmith
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

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003