This article published November 2016. For latest news THIS MONTH'S ISSUE


London market report: How to entice the no-time-for-breakfast crowd

Anyone wanting to see the explosion in fast casual dining needs to go no further than London, with a population equivalent to Denmark, there are plenty of hungry customers to please. London is fast becoming a 24-hour city with night tubes, night markets and where breakfast is just as relevant at noon as it is at 8am.

The race for the lunchtime takeaway or evening meal substitute is on. The average spend on lunch is between £5.50 and £7, and with coffee priced at around £2.30- a £10 per head spend on food eaten out of the home is not unusual. Successful independents including Pret a Manger, Leon, and Itsu are mining this spend with a clear and simple proposition around fresh. Fresh no longer means within a sell-by, but is driven by the provenance of ingredients, the authenticity of the brands selling the food and ultimately the story behind these brands.

Specialist coffee retailers such as Café Nero, Starbucks and Costa are growing spend by focussing on pastries and hot sandwiches; with Costa’s last campaign entirely focused around their signature ham and cheese toastie. Their new format “Fresco” stores focus on the provenance of food under the brand “Rustica”. The in-store operation is now divided, with barista coffee being made in a completely separate part of the restaurant. The atmosphere is also evolving; making customers feel more welcome to dwell- with free Wi-Fi and comfortable seating.

Natural food specialist Pret have increased sales of coffee by focussing on the provenance of ingredients; using organic milk and coffee beans. The other factor behind their growth is the speed of service. Pret aim to be one of the fastest- with the largest number of baristas on duty at any one time, supported further by the largest number of team members. As others copy their model, Pret continue to innovate. Their new pop-up veggie concept is a bold statement and shows the flexibility of the brand. The offer is entirely vegetarian and comprised of existing favourites and new recipes, further this with clear and consistent imagery throughout and green is clearly the focus across menu and store. The coffee offer contains various milk options including soya and almond. Pret are actively asking for customer feedback to determine whether they should open a new concept restaurant- in the way that Innocent did at that now famous festival.

So how are global players responding to this fast casual phenomenon?

Marks & Spencer have always led the way in private label development and the hot food arena is no different. They have been dedicating more space to Food to Go, which has developed from one of many categories within the food hall, to a stand-alone concept with seating and serve over counters. Their latest concept store in Ludgate Hill is branded M&S Food To Go and is a bold proposition strategy for a store in the heart of the City. They benchmark their product development against specialist independents, which includes actively recruiting staff from Pret.

The sandwich offer in larger stores now includes freshly made sandwiches in a wider variety of bread carriers and at a cheaper price point than Pret. They are merchandised adjacent to the main sandwich fixture with a clear “made In-store today” message. The classic meal deal offer now extends to hot food with a burger, chips and drink for £6.50. This is a nod to the explosion of gourmet burger bars, notably the arrival of NY big hitters Shake Shack into London.

The store at Ludgate Hill is varied with the best of the M&S prepack eat now offer; focussing on high protein and low carb, enhanced with the new categories: Heat to Eat and Coffee to Go. They offer a meal deal promotion for £5 with sandwich, snack and drink as they look to take a share of the fast casual spend.

What’s interesting about this store is that the communication reflects how customers are behaving – food to take home, food to eat hot, coffee to go, M&S are segmenting their existing range to meet these customer needs whilst suggesting complementary wines to increase customer spend.

The layout is easy to navigate and offers a showcase for the product innovation that sets M&S apart. Operation has been kept simple with microwaves and bean to cup coffee machines, and because there is little food or coffee prep, it is important that the food and brand credentials are well communicated. This plays to the strength of the M&S brand and there are many references to the provenance of M&S established 1884. The customer service is efficient and friendly. Customers are encouraged to dwell with tables, seating, music, free Wi-Fi and newspapers, plus customer toilets.

A notable difference is the absence of a coffee loyalty scheme; which customers have come to expect as standard. This would suggest that the mission is led by food with coffee as an additional purchase- this may restrict the opportunity for the store to establish itself as a stand-alone coffee destination in the future.

Overall, this concept just makes sense in the way that the range has been edited to reflect how customers are using M&S today. It is easy to shop and easy to be delighted with the options available.

Healthy appeal

Greggs is the largest pastry chain in the UK. With over 1,700 stores and its heartland lying in the North of England, Greggs needed to re-position its offer to appeal to a wider, more health conscious demographic across the UK. The new format stores have built their offer around pastries and slices, but have benchmarked their offer against Pret. They have looked at the core value of the brand, which is: freshly baked food at an affordable price, and extended the offer to include freshly made baguettes, salads and soup to go. They have recently launched two new bakes under the healthier Balanced Choice sub brand which now accounts for 10% of their total sales. They have remained true to their brand strengths; so customers trust the new products they are now selling, and with a recently reported sales increase of 6% in the first half, their strategy is clearly paying off.

No time for breakfast!

This is an important development as more consumers are skipping breakfast at home. There has been a sharp rise of quality porridge, muesli, yoghurts and pastries, including croissants and muffins. This also adds another day part opportunity as customers come back for lunch.

My top tips for grabbing a share of this market:

1. Keep it simple. Decide on a signature product and make it a hero; offer one really good product with up to 5 flavour variants.

2. Shout food credentials and provenance from the rooftops.

3. Understand what your customers trust you to deliver already – then simply adapt this offer to suit the new ranges you introduce.

4. If you are not able to have food prep on display, work hard to explain to customers where the food comes from and how it is prepared.

5. The quality of your coffee is fundamental to your offer. Customers will only accept a bean to cup offer if the quality delivers against a barista and they can get their coffee served without it impacting on queue time, especially on a forecourt.

6. If you are going to learn from the independents, you are going to have to look at all aspects of their offer, including loyalty promotions and speed of service. A simple loyalty card with a stamp is still really effective and an established currency. Plus Pret aims to serve all customers in under two minutes.

7. Start with your core proposition. Are you a retailer with a customer base who eat unhealthy food and need to be offered healthier options within the parameters of your brand? Go bold! Greggs offers protein pots of spinach and a boiled egg.

8. Decide on your value proposition. Are you going to be the mid- week economy lunch choice or the end of week treat for consumers?

Contact Stephanie or any of our contributors by following this link.

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Stephanie RiceStephanie Rice Insight Representative for the London market.

Stephanie works with leading UK convenience retailers and suppliers to shape their customer proposition. She has run her own consultancy practice, advising on strategy projects at main Board level for many years and is a recognised industry expert. Her unique London market expertise is highly relevant to Insight's clients looking to develop innovative propositions.

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