For years the high street has suffered at the hands of out-of-town shopping.  However, times are changing, and we examine why food-to-go is now thriving on the nation's high streets.
 

The growth of the UK's coffee culture

For IGD's UK High Street – Ten to Watch research, we have been combing the UK to uncover the exciting growth stories and expansion opportunities on UK high streets. Alongside food specialists, variety stores and fixed price retailers, we've also considered the increasing opportunities offered by coffee shops and food-to-go outlets, visits to which are becoming an ever more established part of our daily routines.

Coffee shops have grown in number

There has been a huge expansion in coffee shops and food-to-go outlets on UK high streets over recent years, with coffee shops leading the charge. In several major cities, London especially, it can seem hard to walk half a mile without seeing a Starbucks, not surprising when you consider there are almost 600 stores in the UK.

Its closest competitor Costa Coffee isn’t far behind in store numbers, though still lags a little further in sales. Both operators have committed to substantial further UK expansion – for instance Starbucks plans to add 100 new UK stores in the coming year. Offering quality product and creating a relaxed in-store ambiance have played a key part in driving the success of key players in this part of the market.

Examples of innovative food-to-go operators

On the food-to-go side, there has also been significant recent development and innovation. For example:

• Leon is a great example of some of the innovation under way in this part of the market. It’s only been around since 2004, and still operates from just a handful of stores, but it’s a case in point that the combination of healthy food, tasty food and fast food can work. There’s also a lot of innovation in what is a Mediterranean influenced menu, which picks up on the broader trend of greater interest in global cuisines among UK consumers. Fresh Italy, in and around London, is also successfully combining quality food with a healthy offer.
   
• Pret-a-Manger is not a new kid on the block but it’s a strong growth story with much further growth potential. It operates around 170 UK outlets at present, with plans to add a further 30 in the coming year. Pret really stands out in how well it taps in to key broader trends, particularly the greater consumer interest in health, quality food and provenance. And Pret is far from alone in this. The EAT chain for example has much in common with Pret at the front end, though a very different back end operation.

Opportunities for regional and traditional foods

It’s also worth considering the opportunities for regional and more traditional foods in this market. There are many great example here, including the traditional categories such as pies and pasties.  For example:

And if you want an indication of the positioning of these operators, just look at the Square Pie concession in Selfridges and the numerous Pieminister products available in Whole Foods Market.

• The West Cornwall Pasty Company has developed as a premium positioned meal-to-go solution. A 50 strong chain, it was recently sold to venture capitalists by its founders for around £40m, and there are at least two or three other operators with a similar offer.
   
• Other operators such as Square Pie and Pieminister have reinvented the traditional pie, complementing a selection of traditional products with exciting and innovative new fillings, such as feta and spinach as well as mushroom and asparagus.

Opportunities for suppliers and lessons for retailers

There are many opportunities for suppliers in these and other outlets in a channel that many suppliers overlook, and clearly, there can be a halo effect for brands through gaining listings in some of these stores. And it’s also worthwhile considering the broader lessons to be learned from this.

In Ireland, for example, much of this food-to-go ground has been captured by convenience stores, with the likes of BWG and Musgrave having placed considerable focus on developing hot food-to-go, smoothie bars and fresh coffee in their stores. There’s an opportunity for UK convenience stores to take on more of the lessons here as they seek to develop their own propositions and capture a larger share of this market.

More information:

UK High Street - Ten To Watch Understand the factors behind the success of some of the key food and grocery growth stories on UK high streets and appreciate how you can take advantage in coffee shops, food-to-go outlets, specialists, variety stores and fixed price retailers.

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Gavin Rothwell is a Senior Business Analyst at IGD. Much of his work focuses on the major UK grocery multiples, tracking the strategy of each of the leading players, and he is the lead author of IGD’s UK Grocery Outlook report. His work at IGD has crossed a wide range of UK and international themes, including leading IGD’s High Street value retailing stream and playing a key part in IGD’s UK and Global discount research programmes.