Prezzo: We were stagnant and lacking differentiation

Prezzo is exploring the launch of a retail range in the next 12-18 months, as it looks to leverage brand awareness across multiple channels, chief brand officer Olly Smith tells MCA.

Following a restructuring plan approved by the High Court this summer, the Cain International-backed casual dining chain is embarking on an evolved brand strategy that centres around menu innovation, investment into its 96-strong estate, and a multichannel approach.

“Our brand recognition and awareness is really high,” Smith says. “We think there are ways to leverage that more effectively…we’re making good headway on exploring retail and think we have the makings of a brilliant retail range.

“We now have 96 sites, with the intention of creating a 100-strong, self-sustainable, profitable estate so we can invest across all areas that require investment.”

The scale of the estate has changed greatly from its peak of c300, Smith acknowledges – but this means more room for investment into ingredient quality, training, and marketing.

“What hasn’t changed is our nationwide exposure,” he adds. “Prezzo was brought out of a similar stable to its closest competitors. There was close similarity and limited customer benefit to the proposition.

“It felt like it was lacking differentiation to keep up with customers’ eating habits. Innovation had fallen by the wayside; the menu was stagnant and full of holes.”

With five updates to its food offer last year and a similar number this year, innovation is firmly at the forefront of the restructured business’s priorities, along with optimising the supply base and quality control.

“We never set out to be authentic Italian, but rather an interpretation of the cuisine for a broad range of occasions and customers.”

Prezzo continues to be the “home of Italian classics” – with carbonara and margherita retaining their bestseller status – but the menu has branched out to include dishes such as the spinach and ricotta cannelloni and the mushroom, truffle and burrata pizza.

“Now you can access Italian classics easily [at the supermarket] or recreate them at home,” Smith says. “In terms of acquiring new customers, they don’t give us the levers we need.”

Part of the Islington restaurant, therefore, became a dedicated development kitchen and innovation centre, while the team works with right suppliers alongside undertaking regular reviews of the menu and visits to Italy.

“Our recipes didn’t necessarily start in the kitchen, so we didn’t protect ourselves from selling the same things as everybody else.

“Now we’ve set ourselves up for innovation. None of that is revolutionary, but it’s all important and was lacking.”

Other tweaks to the offer include the launch of a bottomless brunch and more shareable dishes, catering to the wide range of Prezzo customers, according to Smith.

The chain continues to be popular for occasions from date nights to family dining, he points out, as well as bigger parties.

“We have one of the best kids’ menus in our sector, I think…but we didn’t have a menu that catered to those parties of 20-30 people,” he says. “The estate has distinct consumer needs across it – some locations have shorter dwell times while others have less appetite for alcohol, potentially fewer courses, or more lunch trade.

“We don’t have one target audience. I think there’s huge potential for the brand in different formats, so the shape of the range could potentially change.

“We also worked on a menu that’s more easily grazed from. We encourage sharing.”

The four-course ‘Taste of Italy’ sharing menu, launched for the holiday period, has been well received.

“In our Christmas bookings this year, the level of customers opting into eating this way has been surprising. We thought it would be an incremental benefit.”

While Prezzo is exploring alternate formats, there’s work to do on the core estate, with a continuing refurbishment programme. The restaurants haven’t changed much, according to Smith, but what has changed is the consideration of how customers use them, with spaces for big parties and more intimate areas for couples.

The brand also invested £1m into new crockery and glassware that hit restaurants last week, but he is firm that interiors – while important – are secondary to the food offer.

“Interiors are important to our customers, but supportive of a great experience, rather than the reason to come.”

As for current trading, Smith notes volumes have pulled back slightly, but average spend has increased.

Premiumisation is one trend – particularly across drinks – with premium wines doing well, while seasonality is another trend Prezzo is keen to tap into.

The summer 2024 menu launch will celebrate seasonality and see “big innovations in core categories,” he reveals.

“We think there are potentially future icons in the pipeline.

“Innovation has been a key driver of success…when we put in newness, customers continue to respond.”

Within the estate, London is trading strongly and has been for much of the year, while parts of the country – and day parts like midweek lunch – continue to be more challenged. Rather than geographical differences, however, Smith concedes Prezzo has been prone to “site-specific issues” in the past due to openings in the wrong locations.

“We’re at a risk of being too swayed by what’s happening in QSR,” he says. “There’s a risk of casual dining being pushed on the back foot. Offering value is more important than ever.

“As much as we’d like our customers to come in every day, that’s not how we’re used. So we want Prezzo to feel like a treat.”

The brand has also invested heavily in skills training, optimised supplier arrangements, and digital platforms.

“We had to be very focused on the bottom line for a good amount of time, but a better development process and menu inevitably means looking after bottom line.”

“Prezzo has a very distinct character. We’re doing a lot of work around how to capture and better communicate the proposition…we’re not falling into the trap of sameness.”