Whitbread is aiming to reduce the high street proportion of Costa’s total estate from 40% at the moment to the low-30s.
Speaking to analysts following yesterday’s full-year results, Whitbread chief executive Alison Brittain said there was a “shift in mood” at Costa towards travel locations and drive thrus – with the latter set to expand by 10 per year.
She said: “We’re not unhappy with the high street, so don’t get me wrong. We’ve got lots of places in the UK where Costa Coffee is a fantastic addition to high street…
“But at the minute, we see some constraints, and it’s probably our lowest like-for-like area. And we do see some very high growth opportunities in other places. Hence, the shift in the mood. But I don’t want people to walk out thinking that we have a big high street problem in our core store.”
The company said there would be a “step-change” in its food offer at Costa, with seasonal ranges launched and targeted promotions. There will be a focus on broadening the offer by introducing hot food and healthier options, especially at lunch. However, breakfast will be the initial focus with a new range being introduced healthy yoghurts, hot porridge and hot bacon rolls to increase transaction values during one of the busiest parts of the day.
Brittain explained: “What that will do, is it will drive increased attachment rate of food versus coffee because our focus is very much to win in the breakfast area. We can see that’s a growing day part and we want to do it better in that.
“Also, we think it’s going to increase footfall of people coming into Costa as well. So, it’s initiatives like that where they will both drive customer volume but also, hopefully, the increased attachment rates.”
Costa will also continue to premiumiuse and specialise its coffee ranges, with new single blends being introduced in May and September with cold drinks such as frostinos and cold brew.
Meanwhile Brittain said the group’s new three-strong steakhouse concept Bar + Block would appeal in metropolitan areas and create new opportunities in London.
She added: “Our Bar + Block concept, which we launched three this year, is absolutely in the sweet spot of being able to play in those metropolitan high streets and it gives us, therefore, an opportunity in future new builds in London and in other big cities to put in that joint site model, which gives us a higher RevPAR and high return on capital.”
During the year a further 53 Beefeater restaurants were converted to the Orange Cow restaurant format. The aim is to complete the conversion of the entire estate by the end of the first half of 2017.