The sandwich bites back

08 May, 2009
The recession has affected the sandwich market and ramped up price wars, but is the solution to up-grade, rather than cut back? Andrew Williams reports
Page 31 

Readers, please picture the following scene - with the caveat that it's not for the faint-hearted, and British Baker cannot be held responsible for any tears which might be shed: "We found an outstanding sandwich shop in the centre of Leeds. The woman was actually cutting the chicken off the bone. It was hot and she was putting it into the sandwich. She was cutting the avocado fresh. It was emotional."

Emotional, indeed! Who could not be moved by such an image? If ever an ambassador were needed to talk-up why bakery retailers should stop their ceaseless stampede towards "value-engineered" sandwiches - meaning cheapo eats - then they should hunt down "female, Leeds, children 0-5, BC1", who was quoted in market research firm IGD's new food-to-go report.

The price war in food-to-go sandwiches has affected everyone, with the formerly premium-loving Pret offering a sandwich range all priced under £2.50, Greggs' price point shifting down to 99p, and Subway launching low entry-point snacks such as cheese toasties. But as the market downshifts, there is a real danger that innovation in the sector has been stifled, and consumers will get bored, says British Sandwich Association director Jim Winship.

"There has been a knee-jerk reaction to recession," he says. "Yes, you've got to have a low-cost range of sandwiches, but if you over-promote that, you can fulfil your own prophecy. Our data suggests people aren't that price-sensitive when it comes to sandwiches. There's little evidence to suggest that premium sandwiches have taken a dip in sales, other than the fact that retailers have reduced their ranges, which distorts the picture anyway." The danger is that sandwiches become devalued, he adds.

Sandwich consultant Jesper Toft of Sandwich International agrees, citing the pizza price war of the 90s, where "everybody forgot to make any money and it never really recovered. It's seen as a cheap and tacky food whereas before, the perception was higher," he warns.

"There are certain people who will respond to cheaper sandwiches, but there aren't that many of them, and you can't push the whole market towards them. The trouble is, if you drop the price, you're not going to sell two sandwiches to somebody - you're still only going to sell them one! There's a danger that the market could go too far, where everybody is trying to put 99p sandwiches out, and there's no real need for that. In fact, people in work probably have more money than they did last year, as a result of cheaper mortgages."

Innovation versus price

The logic is that as expense accounts are cut, higher earners "slum it" with a Pret; some Pret consumers trade down to M&S; and M&S sees some value trade slipping away to Greggs. "I think we've bottomed out now," says food consultant Nellie Nichols. In fact, the former Pret sandwich guru says NPD work in the industry is now shifting back up to mid-tier price points - which satisfy both ends of the market - as consumers tire of zero-bells-and-whistles sarnies.

"The cost-engineered products are very dull and their shelf-life from a popularity point of view is limited," she says. "People are going to start looking for more innovative products - and I can see that coming through in the work that I'm doing. How often can you eat a £1 sandwich that is nothing more than two pieces of bread with some cheese in between? They're out. They have been popular but their sales will start declining."

So there are opportunities for better price points with the right marketing. Georgina Wild of market research firm him! says that in order to counteract consumers switching towards making their own lunch, bakery retailers could offer a sandwich club - a loyalty scheme or offer with a meal deal - which can hold its own against the likes of M&S's £2 sandwich-crisps-drink meal deal.

"Our latest recession research shows consumers are going to be watching the pennies more closely - no surprise there - and that more of them will want meal deals, money-off vouchers and loyalty schemes." Even the usually reluctant coffee shops are about to begin re-invigorating their sandwich offering with meal deals, such as Costa Coffee's imminent lunchtime deal of any panini and a cappuccino for £4.95 - a trend which may yet catch on.

"We have a number of initiatives across the year, each of which has been developed to drive a number of key measures for us such as brand perception, customer satisfaction, value for money and loyalty," explains Costa's head of food Beverley Phillips. "We will be investigating if and when we do run any further offers once we have reviewed the imminent panini and coffee deal."

Meanwhile, Kate Raison, marketing director at Bakehouse, says there is a huge untapped market for hand-held savoury pastries as an add-on to a lunchtime sandwich meal deal, such as cheese twists, which have proved popular in the supermarket lunchtime trade.

Fresh is best

Toft suggests focusing on freshness, health and flavour - through the use of more herbs, spices and superfoods - as a positive way to develop your range. During IGD's focus groups, most consumers cited freshness and quality of sandwiches as being interlinked, with many seeking out high-quality ingredients.

The Subway factor of course cannot be ignored. Now the biggest sandwich retailer in the UK, it's hit upon a winning formula of freshness and meal deals, which bakery retailers can learn from and even better, by offering top-quality bread carriers, says Max Jenvey of food-to-go marketing consultants Oxxygen.

"[Bakery retailers] need a few sandwiches around the low-price entry-point - classically, your egg mayo, your cheese and tomato, and more veg-filled products," he says. "But what they should really be doing is driving value through quality of bread and ingredients. Consumers are increasingly looking for fresh-fill and baked-off bread, which is one of the reasons why Subway is dominating - that's what's driving the market."

And freshness means no YouTube videos of staff shoving salad up their nose, as recently afflicted poor Subway, which may be another "emotional" sandwich shop scene, but for all the wrong reasons.

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=== Him! asked coffee shop customers: ===

== Q Do you plan to eat in or take away the sandwiches/baguettes/wraps you've bought here today? ==

Sample size 349

Eat in 72%

Take away 22%

Don't know 7%

What this means: the majority of customers want to eat their sandwich on the premises, so invest in good seating and create a clean, comfortable ambiance.

== Q When you came in here today did you know exactly what you were going to buy? ==

Sample size 1,014

Yes 68%

No 31%

Don't know 1%

What this highlights: the importance of menus and staff to help make suggestions and up-sell products to a third of customers

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=== Him! conducted a study of shopping habits in a recession during March, and asked: ===

== Q As a result of the current economic climate, will you be collecting money-saving vouchers and tokens more, the same or less over the next 12 months compared with last year? ==

Study Avg Male Female

Sample size 1,017 488 529

More 44% 38% 49%

The same 49% 53% 45%

Less 1% 2% 0%

Not applicable 4% 5% 3%

Don't know 2% 2% 2%

This shows: unsurprisingly, people are on the lookout for deals

== Q As a result of the current economic climate, will you be joining shop loyalty card schemes more, the same or less in the next 12 months compared with the last year? ==

Study Avg Male Female

More 24% 18% 30%

The same 57% 57% 57%

Less 5% 7% 3%

Not applicable 10% 14% 7%

Don't know 4% 4% 4%

What this suggests: a quarter of consumers, especially females, could be tempted away from their lunchbox with loyalty offers

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=== Speciality breads used in sandwiches are still on the up ===

2004 2005 2006 2007 2008

Sandwiches / takeaway breads (£m) 373 394 405 443 469

Change year-on-year (%) n/a 5.6 2.8 9.4 5.9

Source: Key Note Bread & Bakery, March 2009; note: shows UK household expenditure on speciality breads

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=== Which of the following do you often buy for lunch? ===

All Female Male

Total (200) (117) (83)

Sandwiches 91% 90% 92%

Crisps 31% 26% 39%

Fruit 31% 32% 30%

Salads 28% 30% 25%

Chocolate 23% 22% 23%

Savoury pastries such as Cornish pasties, sausage rolls or cheese twists 20% 11% 33%

Soups 19% 18% 19%

Ready meals 15% 13% 18%

Sweet bakery products 14% 15% 12%

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=== How important is each of the following in encouraging you to buy lunch at a particular food outlet? ===

All Female Male

Total (200) (117) (83)

Clear shelf labels 57% 63% 48%

Fully stocked shelves 45% 53% 34%

Money-off offers 44% 44% 43%

Warm food options 42% 38% 47%

Freshly baked options 41% 44% 36%

Meal deals 33% 33% 33%

Takeaway packaging 31% 27% 35%

Vegetarian food options 15% 19% 10%

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=== Have your lunch buying habits changed recently? ===

All Female Male

Total (200) (117) (83)

No 71% 68% 75%

Yes - I buy lunch out a bit less often now 19% 20% 17%

Yes - I still buy lunch out as often but look for deals and offers 10% 11% 7%

Not stated / other 1% 1% 1%

Source: Bakehouse independent research; 200 interviews were conducted anonymously by telephone over the period 25-30 March, 2009, from a sample drawn at random from office workers around the UK (who buy their lunch at least two to three times per week and not from a canteen)

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=== One in five who have meals-to-go are 'fanatics' - purchasing them four or more times a week. They are more likely to be male, aged under 45 and currently working ===

l More than half (56%) of food-to-go consumers decide where to purchase primarily on the freshness or quality of products.

l 46% rate service as a key driver with a third rating quick service as key. Any model that combines fast service with customisation is well-placed to be popular.

l Around one in three (31%) mention price as a key driver of store choice for food-to-go compared to 58% for their main shopping.

l 47% of food-to-go consumers have economised due to the economic downturn, particularly women, those aged 25-44, and those in lower social groups.

l 10% are more likely to stick to a set budget and 10 % are buying more multi-packs to save money on snacks.

l Around seven in ten consumers who purchase either cold drinks, snacks, sandwiches, pies, pasties, sausage rolls, biscuits, cakes or pastries can be tempted to change their mind on what to purchase once inside the store.

l Meal deals are generally popular among food-to-go consumers. Around a third (36%) of food-to-go consumers purchase meals including snacks and drinks.

l Around a quarter (23%) think less about eating or drinking healthily when buying food or drink to consume on-the-go than when they are eating at home. Source: IGD





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