Paul May, chief executive of Patisserie Holdings, has told MCA he can easily see Patisserie Valerie doubling in size in the coming years as it continues to dominate the rollout programme.
May said that while the currently four-strong Baker & Spice and seven-strong Brasserie format would continue to grow opportunistically, Patisserie Valerie would make up the vast majority of the 20 openings a year the group plans going forward.
He also said the group has nothing to fear from the trend for traditional coffee shop chains to diversify into wider food offers. Meanwhile finance director Chris Marsh told MCA the company would not need to increase prices to mitigate the effects of the National Living Wage.
The company is currently in the process of reviewing its rollout programme but May said he did not foresee a move away from the high street.
He said: “Our policy for new stores is still very much the same. We have opened in new areas – retail parks, factory outlets and they have traded in a similar way to high street stores. It gives us more opportunities but it hasn’t fundamentally changed site location or model.
“We have four motorway sites at the moment and they trade very well. Slightly higher sales than a normal site but rents and service charges are higher. If you look at the breakdown of sales it’s pretty comparable to a high street store. We’d certainly be interested in doing more.
“The review will look at opportunities for us in different areas and through our brands. When we did the IPO we had an independent survey done and they came up with 250 just for the high street versions of Patisserie Valerie, not taking into account the service stations, retail parks or factory outlets. At the moment we have 123. I could see two times that number comfortably.”
On the partnership with Debenhams, May said: “It’s a different mix. It gets us into towns and cities where price and locations would make it more difficult for us to get there on our own. Sales are lower but the margins are higher because it’s more drink related.”
Marsh said the sales split across the group had remained fairly steady with approximately two thirds of customers eating in, a third taking out, drink sales at c38% of total sales and cakes c27%. Whole gateauxs make up 8% of sales while lunch delivers 10% and breakfast 9% with impulse buys accounting for c7%.
On competition from major coffee chains, May said: “If Costa try to do what we do it would be a complete to change of their business model. Their staffing would have to increase threefold, they’d need proper kitchens. I still think people see coffee shops as coffee shops. The food is secondary product. There may be some slight erosion but probably their existing customers will just be tempted to buy some food when otherwise they wouldn’t have been.”
On NLW Marsh said: “About 25% of our staff were already on minimum wage so we had made reasonable provisions. We estimate in this financial year it will cost us £475k on top of what we had already provided and then for next year we’re saying it will be about £675k. With improvements in margin, we’re effectively able to mitigate that.
May added: “We did increase or coffee prices to match everyone else but we aren’t planning for any significant price increases going forward and don’t see the need to as a result of NLW.”
