A non-foodie food executive

SSP News Release 8-August-2011

Andrew Lynch, CEO SSP, was interviewed by Rose Jacobs for the Monday Interview in the Financial Times on 8th August 2011.  The resulting article is below.

Monday interview Andrew Lynch Chief Executive, SSP The music-loving accountant fell into the catering business over two decades ago and found he had a taste for it, writes Rose Jacobs

Andrew Lynch is standing in the corner of a dimly lit pub in Euston station looking dismayed. He had wanted to demonstrate the table-mounted mobile phone chargers his company - which owns the pub - offers its customers.

But all the devices have been snapped off at the base. "They seem to have been vandalised," he says, scanning the restaurant for a working example. No luck.

Up to that point, the tour of the station had been going so well. SSP, where Mr Lynch is chief executive, owns many of the mainstay brands of British travel hubs: Upper Crust, Caffè Ritazza and Millie's Cookies. It runs even more through franchise agreements with the likes of Burger King, Starbucks and higher-end airport staple Caviar House & Prunier. And Mr Lynch clearly enjoys showing off the outlets - when the details he is showing off have not been destroyed.

During an interview earlier that day, in a pristine office that he had borrowed for the afternoon from SSP's UK head, Mr Lynch was open and thoughtful but only truly animated when explaining the results of in-depth company-commissioned research into travellers' dining habits. Most people, it seems, turn right rather than left outside a door, or "at least they do in a travel environment", he says.

It is when he crosses the Euston Road for the station, however, that he finally relaxes - though even mention of a personal passion, music, brings him back to a business concern: a café that SSP has set up in Geneva's airport which plays jazz from the Montreux Jazz Festival.

Tall and blond, the 54-year-old Mr Lynch was born in Cumbria and lives near Reigate in Surrey, south-west of London. That means he is not one of the morning rail commuters to which SSP caters. "It's going cross-country, so it's very difficult to take a train."

He does sample its fare most days, thanks to product development kitchens at SSP's headquarters in nearby Weybridge. "I always try to eat what we sell. And in the morning, I always have an espresso." Mr Lynch takes a quiet pleasure in describing his own eating habits for once, rather than being fixated on those of his customers.

Many of the staff at head office rose up through the group's shops or have attended its training courses, which means most know their way round an espresso machine. "Even I can make a half-decent espresso," he says.

Catering, however, is an industry he admits he "knew nothing about" when he was approached about a job in the field more than 20 years ago. A trained accountant, Mr Lynch was working at the time in corporate finance at Prudential, the insurance group, when he got a call from KPMG. John Griffith-Jones, an ex-colleague who is now KPMG's chairman for Europe, the Middle East and Africa, was helping British Rail spin out its catering business and had one of his team ring Mr Lynch.

"He said, 'It's a competitive bid, and management want it. But they need someone who's got outside private company experience rather than nationalised company experience.

Are you interested?' " recalls Mr Lynch. "And I said: 'Why would I be interested?' " Nonetheless, out of respect, he went and had a look "and I just really liked the people".

It was the early days of privatisation, and British Rail was looking for commercially viable segments it could prise off. "In a sense you were creating [a new company], because everything had to be put in - banking and insurance and those sorts of things. Yet it already had critical mass."

It was also a chance for the young, ambitious accountant to get on to the board of a reasonably sized company, with about £100m in turnover at the time. A consortium of four private equity groups raised £13m to buy the business, and Mr Lynch joined as finance director.

Today he calls it the second-best decision he ever made (his best decision was to come 16 years later). The move was an opportunity to go from advising to "getting closer to running something, having the opportunity to make things happen, and accountability, I suppose".

By any standard, but particularly for a man who took so much early persuading, Mr Lynch has stuck with it for a rather long time. Travellers Fare, as the spin-off from British Rail was called, soon expanded from railway stations to airports in the UK, and then internationally. When the company was bought by contract caterer Compass Group in 1992, Mr Lynch joined the board at the FTSE 100 company and he became group finance director in 1997.

For a time, Compass was a darling of the City, increasing its market capitalisation from £300m to about £7bn in less than a decade. Mr Lynch "walked on water at that stage", says Kevin Lapwood, an analyst with Panmure Gordon.

But Mr Lynch's tenure as financial director was not universally lauded. He "had a penchant for capitalising things that other people would normally expense", says Mr Lapwood. A review of the balance sheet by Mr Lynch's successor corrected that - and wiped £20m off operating profits.

Mr Lynch laughs nervously when asked about that and other profit warnings in the year after he had left the finance role. "Gosh, that's going back," he says. "Everybody will have a view with the benefit of hindsight.

All businesses will hit tough periods, and how they come through those is the mark of the strength and resilience of the business. And you see how quickly [Compass] recovered and how strong it was very soon thereafter."

In 2004, he had made what he calls "the best decision of my life" with a move from group financial director to chief executive of SSP - which stood for Select Service Partner - the travelfood business within Compass. "I enjoyed being a finance director," he says. "I wasn't one of those guys sitting there frustrated in finance. But I had been a FTSE 100 finance director for seven years and it wasn't obvious you could go to another FTSE 100 company and have a better job. I thought, 'I love the business and industry, but I need a new challenge.'" Within two years, Compass was looking to focus on contract catering, and needed to pay down more than £2bn in debt through disposals.

Mr Lynch led the sale of SSP for £1.8bn, a third more than analysts had expected and a number that still makes him proud. "It was a lot more [than expected]. Which I think was probably my responsibility."

The rail and airport divisions went to the Swedish private equity group EQT Partners, and Macquarie Bank bought Moto, the motorway service stations business. He stayed in the trains-and-planes game, becoming CEO of the independent SSP.

While he has moved the group back into motorways in some territories, nearly half the business comes from airports and 43 per cent from rail. That cushions it somewhat from economic shocks, he argues, since rail travel often rises when fewer people travel by air.

Mr Lynch is particularly proud of the customer research undertaken by SSP, which has resulted in a map of different diner profiles according to what people want to eat and where they want to eat it. The matrix is so complicated that some of the profiles seem almost contradictory - including experimental food lovers looking for a "safe space" to sit down for a meal and "apathetic experience seekers" grabbing a bite between flights. He wants the company to meet all those needs.

And while he admits the methodology is "quasi-science and quasi-art", the research - overlaid with data collected from airports or stations to which the group is pitching - has proved very useful in starting conversations with potential clients. "You say, 'This is what we think about your airport'," he explains. "And I've never yet met a client who isn't interested in that. They might say, 'That's rubbish,' but it doesn't matter, you're already into the discussion and you build the picture of what you think might work."

EQT will probably begin looking for an exit towards the end of 2012 or beginning of 2013, depending on market conditions. That means Mr Lynch will have to become comfortable again with the financial press. He does not seem particularly wary of a return to public ownership: because of the company's size, with revenues of £1.6bn last year, he argues that SSP is a good candidate for flotation. But all options will be considered.

And he seems content remaining in the sector he stumbled upon more than 20 years ago. "I'm an adventurous eater," he says, describing his own travel-dining profile. "But I like safe spaces."

 

The CV

Born: December 27 1956 in Penrith, Cumbria

Career: 1980 Qualifies as a chartered accountant

1981-83 Works in auditing for Peat Marwick

1983-88 Holds financial management and corporate finance roles at Prudential

1988 Takes part in management buy-out of Travellers Fare from British Rail and becomes financial director

1992 Sells Travellers Fare to Compass, joining the bigger group's board

1997 Appointed financial director of Compass

2004 Appointed chief executive of SSP, Compass's travel-food division

2006 Leads sale of SSP to private equity firm EQT and becomes chief executive of independent group

Family life: Married with three daughters

Interests: Travel and music - from pop, to opera, to jazz. He is particularly proud of SSP's work at Geneva airport, where one restaurant plays jazz recordings from the nearby Montreux Jazz Festival

'I always try to eat what we sell. And in the morning, I always have an espresso'

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