Strategic partnerships such as its recent link-up with Waitrose will be an important avenue for Caffè Nero moving forward, UK CEO Will Stratton-Morris told delegates during a panel session at MCA’s Food to Go conference last week.
The partnership, which sees benefits offered to both the coffee chain and retail giant’s customers through a linked reward scheme, has resulted in significant reciprocal benefit and evidenced coffee as an important loyalty benefit.
“It was transformational for the way we think about our enterprise value as a business,” Stratton-Morris said. “There was clear brand alignment in terms of our value sets and how the companies are run.
“It was an important insight into the currency of coffee loyalty.”
With Caffè Nero’s “core need” to get its coffee at home range available across Waitrose stores, the partnership was a clear “opportunity to go deeper,” he added.
While Caffè Nero’s retail and delivery business are growing faster than its bricks-and-mortar business, it will continue to invest in its traditional service experience and rely on its physical estate.
With an estate of c650, the company’s newer channels are significant but will remain an incremental stream of revenue.
“Retail has grown hugely over past year, with coffee at home, subscriptions, and e-commerce all being part of that,” Stratton-Morris said. “The growth is arguably faster than the store estate but foreseeably, it will remain a small part.
“Caffè Nero is fundamentally a store business that’s diversifying largely through digital channels into a range of connected offers that feed off the core brand.”
He also discussed how delivery has been transformational for the business post-pandemic following a journey of “learning and tweaking” existing stores.
“You have to keep challenging your collective assumptions when it comes to what customers really value. The power of convenience is important these days.
“We spent a long time convincing ourselves we could never do delivery, and then in dire circumstances, we did it – and it’s been an amazing success.
Despite the challenges of coffee delivery, panellist Gabriella Overeem, Uber Eats’ head of enterprise, discussed how coffee is a strong growing category in the delivery market.
“Dinner continues to be the biggest day part, but breakfast and coffee have really grown since the pandemic,” she told delegates. “Brands like Caffè Nero, Starbucks, and Pret are doing extremely well on the platform.”
Restaurants are also tailoring menus to catering to health-led trends, with consumers ordering during different day parts and increasingly looking for healthier options.
Grocery and convenience shops have also been key in driving delivery frequency.
