Not to be overly optimistic, and perhaps it’s just the inevitable emergence from a lengthy and brutal period of rationalisation and consolidation, but things appear to be looking up.
Admittedly the upticks predicted for 2020 are tiny, like 1% growth for casual dining and a 0.3% acceleration for food to go. But after the carnage of the last couple of years, positive news, however slight, will come as welcome news for the operators that skilfully navigated their way through it.
Not that I’m predicting beatific smiles and waves of relaxation. No doubt the pressure remains on. Existing challenges haven’t gone away, particularly business rates and the ongoing rise in wages, and although the stupefying effect on consumer spending brought about by Brexit has shown signs of easing, the already interminable process has really only just begun. Anyway, that sense of optimism didn’t last very long, so let’s try again.
MCA had its Food to Go conference last week and there were plenty of bright spots to feel good about. There is an inherent agility about food to go, even in the largest dedicated food to go operators, and there was plenty to be positive about. But for the largest player in food to go, not so much.
Because of its size, Tesco is often referred to as a juggernaut. Like its supermarket peers, that gives it power. But when it comes to reacting to trends, its sheer size makes it sluggish. As the Food to Go report for 2020 reveals, while the likes of McDonald’s and Greggs are sneaking more and more market share in food to go, Tesco is losing it, dropping from 6.5% to 6.3%.
Of the other supermarkets in the top 10, Sainsbury’s remained flat on 3.5%, as did M&S and Co-op. The longstanding supermarket special £3 meal deal of sandwich, crisps and a drink may retain a strong value proposition but it’s got two problems – first that price point has been under pressure for some time, secondly in 2020 it’s formulaic and dull compared with the livelier, spicier offers elsewhere.
For Greggs, however, the news is nothing but good. It’s expanding as rapidly as it’s evolving, is alert and adept at reacting to trends – the publicity generated by its incongruous vegan offerings is extraordinary – and it still delivers robust value. The numbers reflect its popularity: turnover growth at Greggs was up 4.9% in 2019 (at Tesco it was 0.1%).
It also made a smart move this week when it signed a deal with Asda to open Greggs kiosks in five Asda stores. Presumably Asda’s existing in-store food to go offer in those five stores is going to get trounced, so it feels like a counterintuitive move for Asda to introduce a high-flying foodservice operator with a similar customer demographic into its premises to sell its customers food, when it’s also trying to sell them food.
But the kiosks won’t have a separate till, so Asda could happily view the move as a footfall driver as it will no doubt improve the store’s food to go proposition. Elsewhere Tesco and Sainsbury’s are also working with Yo! to try and do the same, replacing their unprofitable meat and fish counters with a more attractive food to go offer than a sad sandwich, a bottle of Coke and a packet of Walkers.
Without visibility into the commercial agreement struck between the two parties it’s impossible to judge whether the benefits are skewed one way or the other. But, politely, Tesco doesn’t have a reputation for being pushed around by its suppliers, while Yo! boss Richard Hodgson spent years at Asda, Morrisons and Waitrose, so understands exactly how they operate.
Plus Yo! has been selling sushi at Tesco since October 2018, and this week signed a deal to go into 300 Sainsbury’s stores. That suggests the offer resonates with customers and that the commercial agreement is working for both parties.So there we go. Some good news all round!
Pressure, power and positivity
Not to be overly optimistic, and perhaps it’s just the inevitable emergence from a lengthy and brutal period of rationalisation and consolidation, but things appear to be looking up. Admittedly the upticks predicted for 2020 are tiny, like 1% growth for casual dining and a 0.3% acceleration for food to go. But after the carnage of the last couple of years, positive news, however slight, will come as welcome news for the operators that skilfully navigated their way through it.