News earlier this month, that two highly-regarded Mitchells & Butlers (M&B) executives were set to join Tesco’s Family Dining vehicle to work under newly appointed chief executive and former M&B head Adam Fowle, brought one commentator to proclaim, “oh, they are serious then!”. With underutilised and underperforming space to fill, the supermarket giant is deadly serious about becoming a significant player in the UK’s eating out sector and is growing a pool of talent to deliver that goal.
As a statement of intent, acquiring Giraffe for just under £50m last year should have shown how serious Tesco was in becoming a player in this industry whilst also highlighted its need to move away from its retailing roots. Steps taken since that time, across not only Giraffe, but Harris + Hoole, Decks and Euphorium Bakery, have only cemented this fact, whether that has been through expansion, recruitment or format design.
Take the formation of Tesco Family Dining itself. The formation of a separate group to oversee its new ventures/strategy was a statement in itself, getting Fowle into first consult and then become chief executive, underlined its clear thinking of where it wants to take the business. There will certainly be more growth across all four of its current brands and also further investments in other businesses.
Fowle has indicated that he believes there are c.750 Tesco stores capable of housing one of the group’s brands and that the company believes that breakfast trade still hold enormous potential for the group. A further former M&B executive, the group’s head of acquisitions, James Pavey has also been brought on board, to further strengthen its site finding credentials.
While cautious on expansion numbers last year around the time of its acquisition, the now Fowle-chaired Giraffe, buoyed by the initial results from its first in-store Tesco Extra site in Watford, is set to ramp up its openings over the next 12 months.
The retailer has so far opened four Tesco Extra-based sites and is believed to have over 10 further openings lined up inside or near to Extra stores for next year. Openings are being lined up in Inverness, Glasgow, Wisbech, Newcastle, Peterborough, Cirencester, Shrewsbury, Cheam, Yeading and in Martlesham near Ipswich. The mooted plan to get to 150 stores in the next four years doesn’t seem out of reach. How this stretches/evolves the business will be an interesting subplot for the coming 12 months, as will Joffe’s desire to protect the brand’s DNA intact against Tesco’s expansion plans.
It is also in the process of strengthening the executive team at Giraffe, to underpin this growth. Late last year, it appointed Andrew Kemsley to the role of head of hospitality and culture ahead of a year of “considerable growth”. The group is currently looking for a new head of recruitment and someone to fill a newly created position of head of training. More recently, the highly-regarded Tom Crowley, formerly retail director for M&B’s Premium Country Dining Group, has joined as operations director.
If the acquisition and growth of Giraffe has taken more of the business press headlines, the growth of the size of Harris + Hoole and the creation of its own management team under the leadership of Nick Tolley has been equally impressive if more under the radar. In the space of just over 18 months, the brand has grown to c.30 sites in the south east and is starting to stretch its legs in terms of geographical spread.
Openings in Berkshire, Cambridgeshire, Essex and Kent, in places such as Ely, Slough, Maidstone, Sevenoaks, Southend, Braintree and Great Dunmow are lined up for this year, while openings in Chichester and Burgess Hill will see it further grow its presence in West Sussex.
Over the course of the last 18 months, it has also hired a head of people, head of marketing, head of food (a key part of its business and a significant point of difference from other coffee brands) and head of insights. One of the most impressive appointments, is former Burberry employee Danielle Anderson as its director of digital experience. Anderson has already helped the group differentiate its coffee shops with the help of mobile, including a recent hackathon and the launched of its personalised ordering app.
The least trumpeted concept, Euphorium Bakery has also picked up a new sector-experienced chief executive, in former Paul UK head James Fleming. The bakery and café chain, in which the supermarket operator holds a stake, currently operates 16 sites, half of which are in Tesco sites, spread across a number of its formats – Extra, Metro, superstore and Express. Its flagship bakery and café site in Threadneedle Street in the City opened last October, was the first to feature a carvery offer. Like sister brand Decks, the concept allows customers to choose from a counter or dining area for breakfast and lunches, while there will also be a grab-and-go section. The impressively designed site was nearly three years in the making after the company first announced the project at the end of 2010.
Finally, we come to Tesco’s first internally developed concept Decks, and with Fowle consulting, is unsurprisingly close to Toby Carvery in form. With three sites opened in Extra stores already, the group is continuing to look for opportunities to rollout the casual dining format. It said: “We are looking forward to opening more Decks restaurants across the country, if you would like to see a Decks near you, why not drop us a line and let us know where you would like us to open.” It currently operates c240 Extra stores in the UK highlighting the potential rollout for the concept.
It seems the success of the Giraffe deal, and the continued growth of coffee shop investment Harris + Hoole, has strengthened Tesco’s conviction to take further steps toward differentiating its in-store offer. For example, part of a store in Inverness has been handed over to Dobbies, the garden centre chain that it bought in 2007, while speculation has recently surfaced regarding its interest in acquiring Mothercare. It has also ramping up its food offer, as witnessed by the launch of a remodelled convenience store format in Regent Street, which now comes complete with a fresh sandwich and salad bar.
The group’s growing presence in the sector has also been noted by its new peers, whether that is as a new exit possibility for owners and operators, certainly as competition, but also the impetus and operational standards it has brought with it.
It is thought that the supermarket giant will seek further deals to sub-let space in its stores over the next year, with the company considering further restaurant brands and, as we have already reported, a sandwich chain operator. Tesco is determined to revamp its retail theatre, the early success it has achieved with Giraffe; has cemented the fact that foodservice will play a growing role in that process.
