Monday, 7 June 2010

Motorway services stations aren't there to serve you food - which is why it's so crap and expensive


Why are motorway service stations so awful? Why do we use them when we know the experience will be unpleasant? And how do these places get away with charging us so much for the poor excuse for food and drink they serve us? I know these are matters of great importance to you all and have merited my thoughts and attention over the past couple of days (not least because I’ve been in one of two of them during a trip to and from the South West).

My initial thoughts were that there has to be an explanation – after all such service stations are universally awful. Even Italy with its slow food delights has dreadful service stations selling expensive and poor quality food. So there has to be some rational reason for the problem – why services stations are so poor and (perhaps related) why we are prepared to put up with this situation.

There are several possible reasons (and these are not necessarily exclusive) including a semi-monopoly (both at the site and in the overall ownership of the service stations), the impact of regulation and exploiting a captive audience.

To appreciate this lets look first at a similar situation – the sale of popcorn at the cinema. Here there has been some serious research at Stanford University:

The findings empirically answer the age-old question of whether it’s better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the “frill” items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears.

This takes us a little way towards understanding the problem except that we can’t obviously see a primary product at the motorway service station – surely selling us food and drink is their primary activity? Here’s a clue, however, from the Highways Agency regulations:

The Government specifies that all MSAs must offer:

Free short term parking for all types of vehicle
Free toilets and hand washing facilities (in sufficient quantity to cater reasonably for the traffic flow on the motorway) and baby changing facilities
Access for up to two hours for those carrying out emergency repairs to broken down vehicles.
Access to all facilities for disabled people.
Facilities must be available for 24 hours a day every day of the year
Access to a cash operated telephone

It seems clear from this that that primary function of motorway service areas is not to sell us food and drink – that isn’t in the list above. What we are doing by paying over the odds is allowing the provision of these free facilities required by regulation. Just as with the cinemas in the Stanford study, the service station operator is using the excess profits from high-priced food and drink to cross-subsidise the regulatory requirements – the free stuff the Highways Agency requires of the operators. If users paid for parking, to use to toilets and there was no free access it is likely that food prices would be much lower. More significantly, such an environment would put a greater emphasis on maintaining facilities – cleaning tables, sweeping floors and reducing litter.

I suspect that this is only part of the explanation – we now understand the high prices. But that does not (any more than it does for the cinema) explain the poor quality of both food and food service. Part of this may lie in the actual cost of the free stuff – to maintain food prices at a ‘reasonable’ level ‘requires’ quality to suffer. However, I suspect that the captive audience problem explains much of this as does the lack of real on site competition (would a ‘shopping mall’ type approach work better or would the site owner collect the monopoly profit through higher rents).

I suspect that we will carry on putting up with the price-gouging in order to have 24 hour, 365 days a year access to service stations – for the fuel, the toilets and the chance to park and have a break. And we’ll pay over the odds for food and drink so as to have that service. We’ll also put up with poor food and crap service because that’s not why we stop!



Anonymous said...

But if you go in a KFC or Starbucks or McDs in a services, the prices and quality are usually same as in the high street.


Anonymous said...

There IS one good motorway service station, Tebay ( which is run by a family.

I cannot understand why motorway services have been slow to respond to the move to flexible and collaborative working. Most have very small coffee-shop type areas, with wifi you have to pay for. If they expanded these areas, made them more comfortable and welcoming, and provided free wifi and power sockets, it would attract a lot more people in, and change the atmosphere.

Motorway services are ideal places for this kind of approach (as are railway stations, but don't get me started on the railways.....)

Anonymous said...

It's a well thought-out analysis, but something like that won't generate newspaper headlines ("rip-off" service stations are in the "news" again today, just like they seem to be around every school holiday. Surely people would have got the message by now?)

The only thing I'd point out is that if you read the full regulations it does say that need to serve hot drinks and food which is "satisfactory for a meal" between certain hours, amongst other things, even if that isn't their primary purpose.

At the end of the day, they're a business, they want to make money, but if the industry was that easy to milk surely there'd be more services and more than four operators?