Store quality
Public catering in supermarkets is big business, in some instances topping £80m in annual turnover. Targets are no longer just weary shoppers and sagging senior citizens but builders (breakfast enthusiasts) commercial travellers (business meetings) and holiday-makers (better value than motorway service stations).
"Originally retailers saw catering in supermarkets as a means of making stores more attractive," says Mark Bennett, trading manager for Sainsbury's restaurants. "But as consumers are spending more money on eating away from home they will spend less on groceries, and it's vital that we retain our share of consumer spend on food. As catering margins are more attractive compared with retailing, where profit margins can often be in single figures, catering is very important and operates as its own profit centre."
J Sainsbury opened its first cafeteria in 1987 and now has 435 stores, of which 200 have restaurants with an annual turnover of £80m. Average spend is £3.72, mainly on breakfast and hot main meals such as fish and chips at £3.95.
Like its competitors, J Sainsbury has expanded and developed its catering to meet the changing requirements of the customer. The main change was the switch from a coffee shop to the Shoppers' Restaurant and the introduction of hot food in 1994.
"Customers ordered main meals from coloured photos on the menu. Food was not displayed on the counter as we wanted to get away from the canteen image of food sitting in bains-marie," Bennett says. "Meals were then freshly prepared and delivered to the table some seven minutes later."
J's restaurants were launched in 1996, and the following year J Sainsbury pre-empted its rivals by opening the first premium Espresso coffee bar. The latest concept launched in March this year is Café, with a new image and fixed menu including, for the first time, pizzas, pastas, omelettes and freshly baked French pastries. Café is being rolled out into new and existing stores in an extensive refurbishing programme. J Sainsbury also has 20 Starbucks run as concessions.
"Our restaurant offer has typically targeted the time-rich, cash-poor, although the new Café broadens that appeal," Bennett says. "We don't restrict ourselves to serving store customers. Builders are our main consumers of breakfast, commercial travellers use us as meeting points and our stores sited near holiday routes are jammed during holiday times."
A vivid example of the importance of customer catering in this market was shown when Carlos Criado-Perez was brought in as Safeway's chief executive in 1999 to revive the company's flagging share price. One of the first things he did was to put food service on the top of the agenda, making public catering part of driving the business forward.
Within a few months the share price trebled and customer spending rose by £1m. Of its 480 stores, Safeway - the smallest of the main supermarket groups behind Tesco, Asda and J Sainsbury - has coffee shops on 220 sites, the first opening in 1990. It flirted briefly with snacks and sandwiches, and then developed a traditional offer ranging from soups to main meals, such as lasagne and fish and chips. Last year it launched Café Fresco, followed closely by Fresco Express and Mega Fresco.
"Originally the principle was to put a public catering outlet into any store, depending on size. Therefore a store of around 15,000sq ft would have a coffee bar with a limited range of main meals," says Juliet Hatcher, business development manager, Foodservice Formats. "Customer research showed a preference for a warm, inviting environment more like a marketplace, and Café Fresco reflects this. It has fresh food, smart display counters decorated by fruit and vegetables and theatre cooking."
The first Café Fresco, tested at Woking, Surrey, was a stand-alone restaurant with its own entrance. Research later revealed that customers preferred the restaurant to be part of the store, and further Café Frescos were totally integrated. "There was a preconception that you couldn't have a quality restaurant as part of a supermarket, but although we didn't want to alienate the traditional customers, we wanted to attract business people who wouldn't normally come into the coffee shop for lunch," Hatcher says.
Café Fresco is now in 15 stores. Fresco Express is a combination of Café Fresco and the coffee shop, and Mega Fresco is suited to hypermarkets of more than 50,000sq ft, selling a non-food range and now in five stores. Mega Fresco sells hot snacks offering soup and paninis, there is a grill bar serving breakfast, fish and chips and southern fried chicken, plus outlets offering pizzas, crêpes, waffles and wok meals.
Twenty per cent of the products come from the store, with the rest split between suppliers and Safeway depots. Some food is brought in part-prepared, such as battered fish, but items such as pizzas and pasta are cooked on site.
Asda has 256 stores, all of which have some form of customer catering, part of the company's philosophy since it opened its first sites in the 1960s. The concept is the same, although menus range from a full café to snack bar according to local demand, in-store offers, and customer demographics. Nathan Mills, general manager foodservice for Asda, explains: "If we have non-food goods in-store, this lengthens browsing time and we'd probably put in a café rather than a snack bar. Our latest store in Manchester is over 100,000sq ft and customers could be there for two hours, so they would probably want refreshments."
Traditional
The menu at Asda Café and Food to Go Café offers a full English breakfast retailing at £1.50 for six items and traditional main meals such as steak and kidney pie costing around £2.98, as well as lighter dishes and sandwiches. Food to Go is primarily a take-away service, although food can be eaten on site. Average spend is £2.
"We see in-store catering as an important service as well as a profit centre," Mills says. "It attracts customers and for many shoppers is an important factor in choosing where they shop. We listen to our customers and respond to changes they want, such as revising menus and making sure the environment is pleasant, so we're constantly refurbishing."
Where suitable, Asda uses its own brands, and in the 1990s pioneered the ready-to-cook curry pots concept on the shelf which became so popular it is now sold in Café Asda.
The same variety of catering outlets is operated by Tesco. These include the latest Café Refresh, which opened in summer 2001, 75 Tesco Express outlets sited in petrol forecourt shops, 41 Tesco Extra cafés in bigger stores and 168 Tesco Metros based in high streets and city centres. The latest deal is a mega breakfast with 14 items for £3.49.
Factfile
J Sainsbury
33 Holborn, London EC1N 2HT
Tel: 020 7695 6000
Web site:www.sainsburys.co.uk
Stores: 435
Stores with catering: 210
Catering turnover: £80m
Tesco Stores Tesco House, PO Box 18, Delamare Road, Cheshunt, Waltham Cross,Hertfordshire EN8 9SL
Tel: 01992 632222
Web site:www.tesco.co.uk
UK stores: 730
Turnover worldwide: £25.6b
UK staff: 200,000-plus
Safeway Stores
6 Millington Road, Hayes, Middlesex UB3 4AY
Tel: 020 8848 8744
Web site:www.safeway.co.uk
Stores: 480
Staff: 90,000
Turnover: £9b
Asda Stores Asda House, Great Wilson Street, Leeds LS11 5AD
Tel: 0113-243 5435
Web site:www.asda.co.uk
Stores: 256
