Motorway service brand Moto has worked hard to change perceptions of the sector in recent years, and now it has a new owner. By Mark Choueke
Catering giant Compass has completed the sale of its travel concessions business, in a deal that sees Australian bank Macquarie become the new owner of motorway service station brand Moto.
Compass received &£1.82bn in total, but that sum includes the sale of CaffÃ© Ritazza, Harry Ramsden’s and Upper Crust to private equity group EQT Partners.
Moto is the dominant market leader in motorway service area (MSA) brands but that, according to one marketing consultant, is only by virtue of the fact it has more sites than any of its rivals. As Moto has 43 of the 86 MSA sites in the UK the source suggests that its status comes “not necessarily because it is favoured by consumers”.
However, in a market long dominated by three big operators – Moto, Welcome Break and Roadchef, which together boast an 89% share of the market – Moto has made concerted efforts in recent years to pitch itself as the premium experience for drivers wishing to stop.
Since rebranding from Granada in 2001, Moto has continued attempts to distinguish itself from its rivals. Its “no quibble” guarantee focuses on customer satisfaction, offering to refund any customer unsatisfied with the quality of meal or service. The “Moto in the Community” scheme has seen more than &£500,000 raised for various charities and other Moto-branded schemes have attempted to address ways of improving the MSA experience for families with children, coach drivers, truckers and travellers with pets.
Four Moto branches offer fully equipped business centres with meeting rooms, telephones, fax and e-mail facilities, photocopiers and food and drink, as well as luxury washrooms and showers.
Perhaps the most significant innovation to drive footfall into Moto stations is the deal struck with Marks & Spencer that gives the retailer’s Simply Food stores a presence in Moto MSAs. According to Richard Buchanan, head of corporate branding for consultancy Corporate Edge, partnerships such as this with premium high street brands are the single most influential factor in delivering Moto the premium brand awareness that it craves.
Buchanan says: “What consumers resent is being captive and feeling they are there to be exploited. But brands such as Marks & Spencer, Costa Coffee and McDonald’s give the motorway service station the feel of a high street in contemporary Britain and start to change the perception of MSAs as poor quality and service at a high price.”
Nick Cloke, director of marketing consultancy Catalyst, has worked with Moto in the past and says: “Traditionally motorway drivers would not wait for a Moto before stopping for petrol or to use the toilet – they would take a chance with the first MSA they reached after deciding to stop. The perception was that there was no brand choice – little to distinguish one MSA from another.
“However, Moto has pushed harder than most to establish brand partnerships that encourage drivers to wait for an extra 25 miles or so.”
Cloke says the task of the MSA – which most brands have now taken on board – is to make themselves “destinations in themselves”. He cites similarities with Gatwick Village at Gatwick Airport, which, at weekends, is full of shoppers and diners without plane tickets.
A Mintel report from April 2005 concurs that Moto “is playing a pioneering role in raising standards of MSA retail” but adds that the company, along with rivals Welcome Break and Roadchef, has seen profitability decline.
Problems faced by Macquarie will include exactly what to do with its new acquisition. The Mintel report suggests that the rate of growth in new MSA sites will remain slow due to the completeness of the existing network and hold ups in the planning process. This problem is twinned with a need to replace and refurbish ageing MSAs, many of which were built in the 1960s and 1970s.
And while some retailers with a presence in MSAs specialise in travel location retailing such as Fonebitz (33 MSA stores) and electrical chain T2 (nine MSA stores), others such as Boots, Superdrug, Bhs and Halfords have pulled out of MSAs after disappointing performances.
Despite this, Macquarie Bank has acquired an asset that Buchanan believes is “every marketer’s dream”. He says: “The special thing about MSAs, and the reason I love them as a marketer, is that it is the one place where you get a complete cross-section of the UK population together under one roof.
“You see the high class professional executive who hopes there will be an M&S Simply Food, alongside the family whose idea of relief may be a McDonald’s and a ball pit for the kids to play in for half an hour. It’s the marketing director’s challenge to somehow draw them in and cater for all – to find genuine appeal and keep their service station relevant.”
Facts and Figures
â¢ 70% of adults say prices at MSAs are above those on the high street, 6% more than in 2003 and 16% more than in 2000
â¢ 87% of consumers are put off buying at MSAs by the high prices
â¢ 11% of consumers, mostly ABC1s without families and 15- to 19-year-olds, would like to see greater retail provision at MSAs