Greggs has said its U-turn on home delivery was prompted by consumer demand but stressed there are no plans to extend its partnership with UberEats beyond its current trial in Newcastle.
As of this week Greggs is available for home delivery within a mile of selected stores across the city.
The move comes despite repeated denials from Greggs chief executive Roger Whiteside that the company was planning to move into home delivery.
Back in March, he told MCA: “We don’t see there’s any real scope in home delivery for us but we do think Food on the Go will develop click and collect as a way to satisfy the demand from customers.”
His mood softened last month, when he appeared at the Lunch! show, when he expressed admiration for McDonald’s in turning a sub-£5 average spend into a c£10 average spend for delivery.
He said at the time: “That to me says, customers want this. I wouldn’t have thought that three four years ago. I’m now convinced they want it. They question is can anyone make any money to satisfy that demand? I don’t know. We are watching it and will see.”
Yesterday, a Greggs spokesperson told MCA that this was a limited trial in response to consumer demand and no timeframe had been set for evaluating the impact.
Whiteside said: “When it comes to food-on-the-go, our customers tell us that convenience is key. We’ve been working hard to take Greggs to where our customers need and want us to be including office parks, industrial estates, retail parks and travel hubs. More recently, we have also launched our office delivery service (from selected stores) and opened our first Drive Thru.
“Online ordering and delivery is something that we are often asked about and we are excited to confirm that we have launched a trial of this new concept to customers in our home city of Newcastle upon Tyne. This latest innovation will enable customers to enjoy our great tasting, good value food wherever they are, offering them the ultimate convenience.”
Comment by MCA director of insight, Steve Gotham:
Without question, Greggs is right to be trialling delivery – if a brand is not innovating, then it risks going backwards – so Whiteside’s open-mindedness is to be praised.
Home delivery is a growth market and will continue to out-perform the wider eating out market for several years to come. It is being led by younger adults and younger adults who typically gravitate to larger urban areas. With the notable exception of London, Greggs has a strong presence in many regional cities, in particular Newcastle, and drop densities are hugely important to the economics of delivery. In addition, MCA’s consumer research highlights how the key factors that would encourage more home delivery – cheaper food prices, more promotional deals and quicker delivery – could all be considered to sit well with Greggs’ value-led proposition.
That all said, home delivery is heavily skewed towards the evening and to a lesser extent, late night day-parts. There is a question mark over the extent that Greggs’ typically smaller eat, food offer works well later on in the day. Breakfast, lunch and snacking for sure – but not necessarily evenings. There is an opportunity for it to help unlock some additional spend and certainly it would have to impose a minimum order size – but Greggs may well find that its lunchtime and workplace & college services deliver a more lucrative business extension.
