JDW: wake up and smell the sales

The evolution of the pub, JD Wetherspoon and the eating and drinking out market continues. “We want to sell more breakfasts than McDonald’s,” was how John Hutson summed up his company’s early morning ambitions, as he confirmed plans for Britain's best-known pub chain to open most of its 750 locations at 7am. The move, to my mind at least, is big news. Wetherspoon has so often been at the vanguard of pub innovation, be it on planning and new licences, training, product innovation, its early cessation of smoking and its previous move to 9am opening. Hutson, chief executive, said that while Britain’s biggest pub chain was currently a long way behind McDonald’s – “they have twice as many sites and have been doing it a bit longer than us” – being as synonymous with breakfast as the American fast-food giant was the ambitious aim. Wetherspoon currently sells 275,000 breakfasts per week before 11am and 500,000 coffees and teas. With those sort of numbers, it probably is already second only to McDonald’s in the out-of-home breakfast market, and therein lies the logic. Adding 14 hours to the trading weeks of its pubs would be cost neutral as many staff were already on site at this time of day, it said. The biggest logistical challenge was the cleaning of outlets. “It seemed an obvious move to us to try to grab a bigger share of this market,” said Hutson. The group didn’t see itself as a “retailer of alcohol”, he said, but more as a general retailer of food and drink. Therefore the step further into the waking hours of the British public’s lives was a natural move. “The pub is becoming the place were people have food and drink – or a soft drink – far more than it is just a place to drink,” he said. While only about 30% of Wetherspoon’s sales are food, Hutson said that about another 30% of drinks sales were directly linked to the purchase of a meal. Wetherspoon doesn’t often get these things wrong – if this company thinks there is a sizeable prize to go after by opening from 7am then everyone else in pubs and casual dining should take note. Talking about the potential size of the opportunity Hutson made several references to the out-of-home breakfast market in America, which is substantial and well developed. According to Mintel, in the US 46% of consumers eat their breakfast out during the weekday. Over there a raft of brands compete for the morning dollar. Alongside McDonald’s, Burger King and Starbucks are a raft of other burger chains such as Carl’s, Hardees, Inn-n-Out, Wendy’s, and alternative QSR operations such as Dunkin Donuts, Jamba Juice, Krispy Kreme and Panera Bread plus casual dining concerns such as Applebees, Denny’s, Caribou Coffee, Cracker Barrel, IHOP and so on. It may be a little while before the UK breakfast market is anywhere near as mature as the States, where vast swathes of the population embrace the concept of dining out (or grabbing and going) at breakfast time – but where the Americans lead, we do tend to follow. At the moment, according to Mintel, in the UK two-thirds of consumers eat their breakfast at home everyday with just 2% eating out everyday. And it’s still either cereal or toast for most. Cereals (hot and cold) outgun toast as the nation’s breakfast food of choice (30 million consumers versus 27 million). With a new consumer mindset – the so-called shift to thrift – prevalent, 22 million people appreciate the cost efficiencies of having breakfast at home compared to a restaurant or coffee bar, says Mintel. To support the move to 7am Wetherspoon is to introduce more breakfast items, such as porridge, pastries, fresh fruit and yoghurt and a breakfast bap. As ever, a keen price will be core to the offer with these items available to purchase for £1.49, with a small coffee or tea included. It would also offer these items and drinks to take away. Analysts believe the move will be a welcome catalyst for returning like-for-like sales – currently more-or-less static – to growth. If the breakfast market works for the fast-food brands and coffee-bar operators like Starbucks and Pret, why not appropriately-located pubs and casual-dining restaurants? As ever, “executing” to coin the lingo – that’s having the products, systems and staff to deliver this latest sales offensive – will be crucial. But then Wetherspoon has always been pretty good at that.