Walk into a mainstream coffee house these days and you may be tempted by a nitrogen-infused cold brew, a pink latte, or even a selfieccino, where your face is reproduced in your coffee froth.
While many independent retailers have seen hot food and drink become a welcome, high-margin sideline in recent years, most do not yet have to worry about some of the quirkier trends from the high street.
However, one development sweeping the high-street sector that will be difficult for convenience grocers to ignore is a growing awareness of the effect on the environment of using disposable cups and lids. Several of the coffee multiples – keen to stress their green credentials – are already moving towards encouraging customers to adopt re-usable containers for their drinks, and there have been calls for a so-called ‘latte levy’ – a voluntary, or perhaps even mandatory, charge for using non-recyclable drink containers.
Doing their bit
Independents should follow their example and offer a discount to shoppers using their own cups, thus making it clear that they too are doing their bit for the environment, advises retail consultant John Heagney. Some suppliers to the independent sector are already setting the pace. Expresso Plus says it will make reusable cups available in both its own and retailers’ branding.
Symbol group retailer David Charman, owner of Spar Parkfoot, says he is encouraging Tchibo to introduce a £1 reusable, dishwasher-friendly coffee cup and then give customers a 25p discount when they use it.
He believes that with sales of about 150 cups of hot coffee a day at his forecourt store on the A20 at West Malling in Kent, the move would save much unnecessary landfill. He was originally attracted to Tchibo because it offered a point of difference to nearby Costa outlets, as well as impressive margins of about 75%. “We desperately want to do this. We are very eco-friendly, recycling all our cardboard and getting water from our own borehole. But it’s very difficult as a small independent to do this on our own. It has to be done in conjunction with the supplier,” he adds.
Recycling bins
The UK throws away 2.5 billion disposable coffee cups every year, with almost all of them incinerated or sent to landfill because their plastic lining makes them costly to recycle, even when they are put in regular recycling bins.
But the Paper Cup Recovery & Recycling Group says the best way independent retailers can reduce landfill is to get involved with a ‘bring back’ scheme. This is where consumers can return their used cup to the unit where they bought it and the retailer returns the cups for recycling, through an organisation such as Simply Cups. It says: “We would love to see more independent retailers get involved. Even the most remote outpost can sign up, as cups can be sent for recycling by post.”
Drinks get posh
While many believe we are close to “peak coffee” in terms of outlets in the UK, the market is still buoyant. That is partly thanks to customers prepared to pay for ever-more sophisticated drinks, with vendors offering a wider range of flavours and options, and not just coffee, argues Heagney. “Bean-to-cup coffee is a must and those retailers still offering instant coffee are missing the spot and not offering consumers what they want,” he says. “Herbal teas and decaf are important extra products that, if space allows, retailers should consider.”
Personalisation – adding syrup to a cappuccino, making an Americano a bit weaker, or simply having extra milk in tea – is another trend that independent retailers should be aware of, says Expresso Plus. And as tea gains ground, with fruit, herbal and green varieties popular now for home consumption, the small number of tea bars popping up on the high street may start to proliferate. Industry pundits predict people will start thinking of tea with all its varieties with the same reverence as coffee.
Most hot beverages are consumed before midday, with 64% of breakfast-to-go consumers buying a hot drink. This shows how morning meal deals can be effective, but displaying hot drinks with snacks can increase their appeal throughout the day. The value of coffee transactions in fact increases two to three times when cookies, pastries or sandwiches are displayed with the drinks, says biscuit manufacturer Border. It has launched its Café Bake range – which includes Lemon Drizzle Melts and Yogurt, Cranberry and Pumpkin Seed Oat Crumbles – to encourage this upselling at the hot drinks fixture.
Not just lunch
In food-to-go, lunch remains the largest opportunity but, as with hot drinks, with the right encouragement for customers, sales can be boosted throughout the day. So-called ‘day-parting’, with porridge to catch early morning commuters and soup later in the morning, will further increase the overall market to consumers, says Heagney.
Waitrose, in fact, has identified a move from three fixed meals per day to four, with its food offering fitting around lifestyles, rather than the other way round. An example of this trend towards catering for a wider number of eating occasions, says industry think-tank IGD, is the expansion of gym and protein boxes at several food-to-go specialists in the past year as fitness enthusiasts boost their energy levels before or after sessions.
Healthy options
Snacking has become increasingly important, says Addo Food Group. Traditionally, sandwiches and crisps dominated the area, but consumers are now demanding more choice, it says, with interest in higher-protein foods, more unusual flavours and substantial, healthy food options such as its Wall’s Sausage Thins, an alternative to sausage rolls with fewer than 80 calories.
At the same time, retailers such as Charman at Spar Parkfoot are diversifying into evening meals. At the beginning of this year, Charman started offering pies, cooked on-site and available for £2.49 a slice, or £3.49 with roast potatoes, gravy and vegetables, on Friday lunchtimes. Each week he adds variety with a different filling, including steak and mushroom, chicken and leek, and lamb and apricot.
Special equipment
The idea is to test out the concept, after doing well with pizza, before scaling up to evening meals this autumn with a new member of staff and specialist equipment, he says. “We are lucky our bakery manager is a trained chef and we wanted to see if there could be a market to develop afternoon and evening business. We started small-scale with half a dozen pies cut into 36 servings, which mostly sell out.”
With some customers reserving the pies by phone, he is also looking to introduce an online food-to-go pre-ordering service. “We’re unlikely to venture into Deliveroo-style delivering, but this is not completely out of the question, as we already deliver from our butchery department to wholesale,” he says.
Starting the day
Breakfast-to-go is cited by many as an exciting growth area, with 25% of the UK population buying food-on-the-go for their first meal of the day at least once a week, says Expresso Plus. Hot dog specialist Rollover, which has introduced a Wall’s All Day Breakfast Sausage Baguette to its range, says some retailers report doubling sales after introducing a specific breakfast line on top of their pre-existing offer. It says it is important to cross-merchandise products in a meal deal, as food-to-go consumers are highly impulsive and open to influence. Only 31% of food-to-go decisions are fully pre-planned.
Lantmännen Unibake UK says the 5.8% growth in breakfast-on-the-go sales is largely down to a rise in the average time taken to travel to work. But retailers should be wary not to over-price, with 68% of consumers, it says, giving the reason they avoid eating breakfast out-of-home as it being too expensive. The company says displaying freshly baked pastries in grab-bags at tills and alongside coffee machines, with effective signage declaring “Great with coffee”, “A breakfast treat” or “Freshly baked”, can help increase impulse sales.
Dipping a toe
With a quarter of convenience store customers looking to eat immediately and the category delivering retailers profit margins generally of at least 40%, there are clear incentives to get involved in what is still, nevertheless, viewed as a labour-intensive sector.
It need not be that way, though. Simply by providing a microwave and hot water, retailers can dip their toe into food-to-go without making a huge investment, says Unilever’s Partners for Growth category advice initiative. There are many just-add-boiling-water products available, from Tetley On the Go teabags in a cup with a sip lid, to pot snacks, such as its Pot Noodles brand and competitors Mug Shot, Naked Noodles and Ilumi gluten-free rice noodles.
Pot snacks see a peak in sales in September, when hungry teenagers are looking for after-school snacks and university students quick and easy meals. Unilever says that with 70% of these noodles, pasta and rice pots being bought with crisps or a soft drink, it is important to display these categories together in-store or link them using point-of-sale material.
Rice pots – such as Symington’s Naked Rice in Chicken Katsu Curry, Char Sui, Szechuan and Malaysian Chicken Curry – are a recent introduction to the category and are performing well. But, says Unilever, retailers must make sure they do not make space for these at the expense of noodle pots, as this will limit growth. Kabuto Noodles says it is having success with retailers displaying its Chicken Ramen, Beef Pho and Vegetable Laksa pots next to self-serve hot water machines and sandwiches.
Minimal hassle
Options for retailers moving into food-to-go are getting easier, with equipment that takes up little space, is easily maintained and is often available on lease or outright purchase. Coffee machines from Expresso Plus, for example, start at 60cm wide and require a one-button flush cycle each day with a deeper clean once a week. Retailers can decide on a three- to five-year lease or to buy the machine outright. Payback can be quick, says the company. With its Lavazza Lusso machine, when retailers sell cups at £2 on a five-year lease, they would only need to sell eight cups a day to break even. And, it says, they could make a profit of more than £13,750 a year by selling 40 cups a day, with a net profit of 57%.
Rustlers says its burger-type snacks work well for convenience stores in areas where people work or on commuter routes, because – with eight out of 10 workplaces having microwaves – they can be heated at work or in the store in its pre-programmed microwave unit.
More experimental
As everyone gets more comfortable with convenience stores offering food-to-go, the bar is being raised with street food and posh grub finding its way into the mix. To keep convenience stores on trend with the latest street food cuisine without having to invest in significant re-branding to reflect ever-changing fashions, Country Choice is this autumn launching Go Global, which it describes as an all-encompassing world cuisine branded concept. It will allow retailers to offer food from around the world, switching from Mexican-style burritos one day to Asian noodles the next, says the company, without having to change the in-store imagery or cooking equipment.
In-store and car park “pop-ups” offering street food favourites is a growing trend, says retail consultant Scott Annan from Blue Ananta, and can be successful when involving the maker/artisan producer. But he warns: “The consumer will always smell ‘faux’ or feigned artisan where a retailer with no heritage in the food attempts to market it as ‘street food’.”
By Juliet Morrison
