After a promising summer, with reopening, Eat Out to Help Out and the fine weather encouraging people to go out, the outlook is turning darker. Consumers were already forsaking the good eating out habits they had rediscovered in August and then the long-heralded second wave struck. And it’s building momentum, causing further job losses and corporate casualties with more to come. But, among the carnage that parts of the eating out market is enduring, there are some bright spots.
Turn the clock back to the late twenty teens. One sector hitting the headlines was coffee shops; they catered for lunchtime trade, the travelling public, workers needing a low cost office to work from for the price of a latte, and students walking down the corridor of their uni, to name just a few. The reasons for this burgeoning trade puzzled many observers: just what is it that drives so many people to have a coffee so frequently? Many reasons were put forward: it was available everywhere you turned, replacement of the pub for a drink, the zeitgeist and so on. And these reasons haven’t deserted the coffee shop sector.
Recently, Tim Hortons announced a drive into southern England from its Scottish and north of England heartland (see News), while Watch House, an artisan coffee shop based in London, is adding new sites to its existing estate. I will be keeping a close eye on both of these; indeed, Tim Hortons has been rising through the ranks for the last couple of years.
But the difficult times that Pret a Manger (a universally admired operator) is going through attests to another issue and that is, while the coffee shop sector clearly has momentum, its customer base is changing. The onset of working from home (likely to continue in my view) means that customers are now to be found in places where they didn’t used to be. They are no longer in the city centres.
Operators are already working their way around these changes. Pret, again, has launched its subscription model to encourage well-established customers to retain their Pret coffee-drinking habits. Artisan coffee shops are now springing up in the suburbs, forsaking their former city-centre location as they address the working at home trend.
Above all, the sector is showing resilience built on its ability to change business models, find new locations and develop new product offerings for the post-Covid customer.