Abokado, the healthy eating Kings Park Capital backed chain, is taking a more cautious approach to expansion than previous years, though still hopes to open four or more new sites in London in 2017, MCA has learnt.
Managing director Mark Lilley described property prices as still too inflated and said he believed there would be better opportunities down the line, with signs already coming through of improved supply and vacant sites.
He told MCA key drivers for growth in 2017 would be getting the most out of Abokado’s nearly 30-strong estate through delivery partnerships with Deliveroo and Seamless, and trials of opening at the weekend.
Lilley said: “We believe there’s merit in ‘keeping our powder dry’. We have offers out currently on one or two opportunities but nothing firm. Both our last two openings achieved record sales.”
He said cost pressures had been intense, principally because of exchange rate movement on the 80% of food inputs sourced from abroad, while the cost of key ingredients salmon and avocados had gone up.
Lilley said: “We’ve been able to mitigate most of the exchange rate movement through negotiation/retendering and selected price increases.
“Our quality and portion sizes remain unchanged - our customers are savvy and offering a premium quality product is key to our proposition. We certainly wouldn’t dream of doing a Toblerone!
“Salmon and avocado prices are already softening so we do see upside here in the medium term and also longer term when import trade tariffs fall away.”
On the further exploration of delivery, following a trial with Deliveroo, he said: “It’s clear that the way people buy and consume food has changed and continues to evolve.
“We’ve worked very hard over the last couple of years on our core in-store customer and now have the opportunity to build on this further by introducing other sales channels.
“Most, if not all, of our key competitors have already exploited these so we believe we’re well placed to continue growing our business and taking market share.”
Lilley said that work on improving the business’ overall cost structure had helped it offset pressures such as rates and living wage.
He added: “I believe the restaurant model has changed irreversibly due to changes in eating habits, disruptors such as Deliveroo, the change in the cost base and intense competition. We’ve reshaped Abokado to be extremely well positioned to generate above average returns even in this ‘new world’.”