Itsu has seen a strong pick-up in trade since late spring, with the last 8-12 weeks described as among the strongest in its history.
“It was a really strong 2022, and we’re looking to continue that into 2023,” chief financial officer Greg Thorpe tells MCA.
“Like-for-like performance has improved a good three or four points since May.”
He was speaking after the Asian-inspired healthy eating brand published its 2022 financial results, which saw the retail division hit £100m in sales.
“It feels pretty compelling,” he says. “Last year was very much a story of regional recovery.
“This year is a little more the resurgence of the City. Different parts of the estate have been driving our recovery across the last 12-18 months, it all looks rather healthy.”
The Julian Metcalfe-led business is thriving in part due to its more geographically diverse, balanced estate, Thorpe explains.
Whereas sites in the City and the West End have quieter periods, affected by the season and days of the week, this is off-set by a pickup in the regions, suburbs, and transport hubs.
“More of our growth in the next 20 months will be in the regions, whether it’s large cities, towns, or transport hubs. The more balanced the portfolio is, the stronger it is for the group,” Thorpe says.
Though London is no longer the sole focus for itsu, and office working patterns have shifted away from five days a week, total sales in the capital are still higher overall than pre-pandemic.
Yet where hot food is proving more popular in the regions, London customers still relish sushi during weekdays, Neil Miller, chief customer officer adds.
“When customers come back into London for work, they really can’t make sushi at home, so they’re really looking for that healthy treat. They look forward to going to itsu as part of their back to the office routine,” he explains.
The decision to shift the food from a core sushi offer to include more hot food as the brand expands throughout the country has been borne out by sales data.
“Our West End business has a loyalty to sushi built up over 20 plus years,” Thorpe explains.
“But when we open somewhere like Edinburgh, where maybe the brand has is not so well known as it is in central London, but where the grocery brand does well, the share of hot food is much higher, because people recognise it from the gyozas and the bao buns.”
Regional expansion is being driven by franchise partnerships, and in the latest results, itsu revealed it had gone into partnership with a fourth partner, Costa Coffee franchisee Scoffs.
With a site forthcoming in Exeter, Scoffs open up opportunities for expansion across the South of England, South West, Wales and East Anglia.
“It’s a real opportunity to look at some of the towns or cities we’re not in, there’s a fair few in the South, from Wales through to Hampshire,” Thorpe says. “I think we will want to get moving and get building in 2024.”
Digital innovation
As part of its ongoing digital journey, Neil Miller explains that following the embedding of next-generation kiosks into the shops in 2022, this year has seen the business continue to optimise that technology.
“It never ceases to amaze me that there are always things that we can do to improve that journey,” he says.
“We’ve been releasing six or seven different upgrades to the kiosks, around loyalty, redemption, buying. We’ve been looking at deals and combos and the upsell - all those things have been giving us great returns.
“We’re looking at optimising the menu, based on time of day, day of week, so we merchandise in the most relevant way for customers based on seasonality and preference.
“We’ll carry on doing that, that’s going to be an endless task of incremental improvements to help drive the speed of the kiosks, the simplicity, and the ability of the kiosks to help us sell across the range we have.”
Meanwhile, 2023 has been the first year of itsu’s consumer app at scale following its rollout.
This has meant a major focus on driving downloads and promotion, with new features set to be rolled out soon.
One forthcoming feature will be the ability to order on the app and bypass the kiosks.
“It’s not revolutionary, but it’s an interesting way for us to give the customer more choice and preference about how they want to get access food,” Miller says.
Next steps will include closer integration between the shops and grocery proposition.
“Using the app, we’re going to be launching the ability to redeem a butterfly based on your supermarket purchase, which I think is going to be a huge benefit to customers, where they’re seeing itsu is joined up and rewarding them for buying from us.
“It allows us to cross fertilise that relationship between the two propositions.”
Another major strategic focus for the company will be emphasising itsu’s unique proposition as a healthy fast food brand.
“We’ve always been the healthy option, that’s our shining light in the world of fast food,” Miller adds.
“We recognise we have that relationship with customers, but you’re going see us really sharpen that across both sides of the business and be much more focused around health and what it means to customers.
“It helps us underpin value as well, because people will pay a premium for health - not that we’re looking for a premium pricepoint.
“It’s strategically right in the centre of the next quarter, and will be a big, big part of next year across both sides of the business.”
