COFFEE SHOPS & FOOD-TO-GO: £10 billion sector serves up new offers as commuter demographics change

Costa Argyll Street

The Covid-19 pandemic has almost certainly brought the £10 billion UK coffee shop sector’s proud record of 20 consecutive years of growth to an abrupt end, especially given its dependence on workers and commuters.

London has bore the brunt of this trend, with vast swathes of office space remaining empty as employers have instructed staff to continue working from home on the government’s advice.

The knock-on effect of this has been painful, however, particularly for operators intrinsically linked to travel hubs. SSP Group, operator of brands such as Ritazza and Upper Crust, said its sales in the second half of the year are likely to be down 86% on last year, a decline of some £1.3 billion.

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Elsewhere, food-to-go chain Muffin Break, with 60 sites in the UK, had been trading profitably and was targeting an ambitious growth strategy prior to the pandemic.

However, the volatility that resulted from the three-month enforced closure of the hospitality sector severely impacted trade and cash flow, sending it spiralling into administration.

Fortunately, a pre-pack deal with fresh financial injection from individual franchisees has ensured the continuity of the business.

“The past few months have created challenges that no one in the leisure and hospitality industry could have foreseen at the beginning of this year and we are very grateful for the support and understanding of our landlords and other key stakeholders during what has been a very testing time,” says Michael Arbuckle, director at Foodco UK Franchising Limited, which now owns the business.

The total coffee shop market in the UK comprises more than 25,000 outlets and many of these operators have had to revamp their store spaces to accommodate social distancing regulations.

One thing going in their favour is that, unlike more mainstream restaurants, dwell time among customers tends to be relatively short, often a matter of minutes.

For operators whose model is based around pre-packaged product or preparing food off-site, back-of-house production protocols have not necessitated too many major structural changes and the focus has instead centred more on hygiene and safety.

However, these is a firm push towards making takeaway processes slicker in order to prevent current restrictions from impacting speed of service.

Costa Coffee is trialling a new-look design at one of its flagship outlets, which is set to have implications for how it provides food and drink to customers in the future.

At the Argyll Street branch in London, a bespoke street-facing counter is designed to deliver a quick and efficient service for customers who are not quite ready to enter an inside space out of the home.

The counter spans the breadth of the inner store and curves to an outward opening, next to an outside ordering screen, allowing for streamlined customer use.

Customers looking for a speedy pick-up are now able to collect pre-ordered drinks by using Costa Coffee’s mobile ordering service via the Costa Coffee club app. High-quality Perspex screens have been installed at all counters for added safety.

The store has also been equipped to support a delivery service enabling customers to get their favourite drink brought to them if they are unable to get to site.

“The Argyll Street store is a unique space situated within an old building just off Oxford Street so it was the perfect location to trial a new store design as we continue to explore a post-Covid-19 space,” explains global retail director, Connie Emerson.

“Our customers have shared that they’re looking for safe and comfortable space to relax and enjoy a bit of ‘normal’. But for those that are not quite ready to sit inside, an all-new solution has been designed so they can still get their favourite handcrafted Costa Coffee without entering the store,” she adds.

Greggs responded to the pandemic by temporarily suspending its new shop opening programme with the exception of a few sites where it was already legally committed or it anticipates strong customer traffic.

But with digital shopping channels becoming more important, the chain accelerated its development of ‘delivery’ and ‘click and collect’ services, demonstrating its ability to adapt to changing conditions.

Rival Pret A Manger has had to axe 30 stores in response to the pandemic, which has led to 2,800 redundancies, including 90 at its support centre. However, it said the short-term cost reduction measures it has taken are isolated from a wider strategic programme to become a multichannel, digitally-led business.

One of the major operational changes to its business model is the launch of the UK’s first ever in-shop coffee subscription service.

The YourPret Barista coffee subscription, which customers can purchase for a fixed fee of £20 per month, covers all drink options prepared by Pret’s barista team, including tea, coffee, hot chocolate, smoothies and frappes.

The subscription is loaded onto customers’ Apple or Google digital wallets or can be accessed via emailed QR codes. Scanners installed in Pret shops enable customers to verify their subscription status and redeem coffees and other products.

Redemption is limited to one drink per transaction, up to five per day, with 30-minute intervals between each transaction to prevent misuse.

“This is just the first step in our plan to bring Pret to more people,” says Pret CEO, Pano Christou. “ We now have the building blocks to establish Pret as a multichannel, digitally-led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.”

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Andrew Seymour

The author Andrew Seymour

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