Grabbing an ever bigger chunk of the market

Asda is adding 110 more convenience stores this month alone that will enable it to make further inroads into the grab-and-go food category and it is not alone as all the major supermarkets and symbol groups like Spar are experimenting with their food-to-go models.

They recognise that we are now in an era that is much more powered by grab-and-go and delivery-only propositions. This poses a big question for foodservice operators and most notably the casual dining brands – should they simply abandon their established strategies of opening more dining rooms and consider downsizing their exposure to bricks and mortar.

Clearly the halcyon days of high streets up and down the country filled with myriad casual dining brands are sadly well and truly over and operators across the board are coming to terms with the new world order of high levels of demand for delivery and take-out. Throw in a plethora of onerous costs now involved with operating sizeable bricks and mortar properties and you have to wonder what to do with their dine-in premises.

The trend away from the old dine-in model is evident in the US where Chipotle founder Steve Ells is developing an automated takeaway-only brand, Kernel, as he cites the fact there has been a steady decline in visits to waiter-service restaurants since 2006. From late-2022 Ells says only 15% of all the visitors to counter-service venues revealed they had chosen to dine-in during the previous year.

Kernel’s pick up and go area

Even the inventor of the ‘third place’ Starbucks is rowing back on the idea of places for people to lounge around over a latte and Panini. It recently announced the closure of 400 stores to make way for a strategy focusing instead on Express format stores. These pick-up only units currently represent only a tiny percentage of total group sales but the company plans to add many more of them to alleviate the pressure it faces from the high levels of collection and delivery at its traditional stores. By 2025 Starbucks hopes to serve 40% of its delivery orders through mobile pick-up and Express stores.

In the UK the shift away from dine-in is well underway. Prezzo has reduced its estate from 300 branches to around 90 on the back of the lethal cocktail of business rates, inflation, national minimum wage and food inflation. When this is combined with the dramatic ongoing reductions in footfalls on high streets it has killed the prospect of viable sites in many smaller, rural towns. Prezzo is instead joining a growing number of players increasingly focusing their attention on the grab-and-go market. Its move in this area involves opening a chain of takeaway pasta shops in train stations where it knows for sure it will get the footfall it requires and reduce its operating costs.

Spaghetti House is going down this same route with its new grab-and-go format, which opened its first site in London’s Earl’s Court (that was previously a site for Thunderbird Fried Chicken) and there are plans to roll-out the model that serves primarily pasta and pizza. Meanwhile, it has reduced its exposure to dine-in by closing one of its restaurants as it assesses the post-pandemic landscape.

Fast-expanding franchise chain Heavenly Desserts is to open its first kiosk-style unit in Scotland, which it has named Pico and there is there great excitement that this represents a new opportunity for the brand to open these smaller units that require significantly less operating costs and serve the grab-and-go market.

The flexibility of this format is evident in the recent opening of a new-style kiosk by Snowfox Group within a Tesco store in Manchester. Although the operator of the Yo!, Panku and Taiko brands already operates many kiosks in the supermarket’s larger stores this new format, called Good Eats, is designed to fit into smaller Tesco Express and Metro stores. Although operating from a small footprint it can provide a breakfast, lunch and dinner offer.

Meanwhile, even those supermarkets without convenience outlets, such as Waitrose, are refreshing their grab-and-go offers. For the major grocers this sort of activity comfortably sits alongside their core offerings but for the casual brands on the high street is does pose tough questions about their models. What role do their physical dining rooms play in today’s hospitality environment that is still feeling the tremors of the pandemic that brought about some serious behavioural shifts of which many now look set to stay.

Glynn Davis, editor of Retail Insider 

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.