Luke Johnson, chairman of Patisserie Holdings, has told M&C the group’s flexibility will be key as it proves it can operate profitably in a variety of locations and formats.
Johnson, chief executive Paul May and finance director Chris Marsh spoke to M&C following the publication of preliminary results for the year to 30 September this morning.
May said the group was keen to develop its relationship with Debenham’s, saying the retail giant’s 300 stores made it easier for Patisserie Valerie to enter markets it would otherwise struggle to find a route into.
He said the first store in Belfast will have a production facility, allowing the group to do another 10 stores in the vicinity.
Over the past year the group has seen a shift in sales by day with every weekday apart from Friday increasing its share of sales and weekends seeing a decline.
Sales by products/day parts showed the new afternoon tea and impulse range immediately generating 5% of sales. Whole gateaux sales also increased their share of the whole while lunch, breakfast, cakes & slices and beverage sales all fell slightly.
On different trading models May said: “Our first outlet store was Swindon and the sales figures have been comparable, if not higher than a traditional high street unit. We have got a few more hopefully in the pipeline for that. The second service station again is very much in line with what we forecast. We are seeing those areas as additional opportunities for Patisserie Valerie.”
He said the company would be assessing the scale of the potential for further rollout in these formats.
On Debenhams, May said: “We are in six Debenhams, three of them were existing and three new. We are operating in their cosmetics areas and the initial response from Debenhams is that they have seen an uplift in sales. So far for us, the performance has been quite good. As a group they have 300 outlets and it might be very useful for us to get into certain towns and cities we find challenging.”
Johnson said the focus for growth would continue to centre around Patisserie Valeries opening in traditional high street locations but he stressed that the group would look beyond this.
He said: “I think we want to be opportunistic and as new opportunities like stations, motorway service stations, retail parks, outlet centres and so on come up we can take advantage. We seem to trade well across all of them, albeit with slightly different trading platforms.
“One of the strengths of the business is its adaptability. We look at operators like Costa and others who have over 1,000 outlets and they have shown that they can go in all sorts of locations and do pretty well. We have different economics to their stores but we do believe flexibility is key so we remain alive to new opportunities.
The company is planning to expand its currently four-strong Baker & Spice brand.
Johnson said: “We have been slow in growing that brand. It’s clearly a very profitable business. It is a premium offer and it’s more complicated than Patisserie Valerie so we have taken our time but we will be opening in a London suburb in a few months and if that goes well we will look to do more. Clearly it will never have anything like the size of the market that Patisserie Valerie has but we think it’s going to be a profitable contributer.”
On the scope for the brand, Johnson said: “We have some stats on similar business in Gail’s which is now at almost 30 in London and I think that shows there is scope for those more artisan offerings with premium prices.
“We have a deli element to Baker and Spice which there isn’t in Gail’s and I think that is an important component in its success.”
Johnson insisted there were no plans for a tie-up with another of his recent investments, Small Batch Coffee.
He added: “Small Batch is very much a premium artisan offering and I don’t know if it would fit in a Patisserie Valerie. It’s also very much a Brighton brand and it’s likely to stay in that sort of south coast area going forward.”
Marsh said the cost of the National Living Wage would be £475,000 in this financial year and £675,000 next year.
On whether the group would follow the lead of companies such as Costa which has extended NLW to under-25s, Johnson said: “We’ll see what others do. We must remain competitive and we want to be an attractive place to work. We’ll have it under review.”
