Retailers had never really thought that highly of selling eat-in food until merchants like Tesco got their hands on a few garden centres and saw what the Squires of this world were up to. They then realised there might well be something more in running cafes than they’d initially believed. Not to mention the typical 70% margins.
The unpalatable face of supermarket cafes.
The garden centre treatment of food is so vastly better to that in the supermarkets - and significantly more profitable as a result – as to surely make it inevitable that the days of the bolt-on supermarket cafe with uncomfortable plastic seating and equally unappealing food are numbered.
My prediction is that cafes will become more integral to the shopping experience and sit more centrally within the big grocers’ stores. But to make this a reality retailers need the necessary leisure and hospitality expertise.
While Tesco and Sainsbury’s might be slowly moving in this direction Marks & Spencer still leaves its cafes firmly in the hands of its stores’ general managers. What you therefore end up with is M&S’ top-notch retail presentation skills coming through with the food but the overall offer is let down by shocking service because there is no food and beverage expertise involved.
In complete contrast Debenhams is making great progress. Its private equity owners realise the need to maximise all parts of the business – including the food and beverage offer – and so it has sought to at least match the quality of the food offers found on the high street.
Has smelt the coffee.
Crucial to its success has been the appointment from Pizza Hut of a very capable regional director for the food business. He understands that Debenhams wants to create a food and beverage offer that challenges the coffee houses and mainstream casual dining offers.
As part of its food and beverage mix Debenhams now has small espresso bars on each floor by the entrances and a contemporary feel to all its eating and drinking areas. Gone are the days of ‘Are You Being Served’ at Debenhams.
We're still not being served by most retailers.
But don’t think it is a one-way street - with only leisure specialists moving into retail. There is just as much expertise starting to go in the other direction. There is a realisation by some leisure companies that they are not creating the directors of the future.
They are also beginning to look at bringing in specific retail industry skills – specifically the trading mentality that can impact positively on how they deal with products and pricing.
It is not unusual for leisure businesses to have rigid national pricing policies whereas it is widely known that retailers change their pricing by location and store format. They also price flexibly for locally sourced products.
The leisure companies now want to buy in some of this knowledge and style of operating and there are some large players currently looking to recruit individuals that can bring with them this trader mentality with the result that margins can be boosted across their businesses.
There are clearly many skills that can be passed between each of the industries and it will be interesting to see which is the most pro-active at initiating change. Will it be the retailers who improve their cafes first or will they beaten by the leisure companies and the introduction of flexible pricing.
I think I’ll pop down Squires and consider the options over a lunch of salmon quiche and Eton mess.
Nigel Sapsed is director of executive search specialist Sapsed Stevens