Naturally Nero

23 October, 2009
Page 22 

The recession has killed off many things banks, bakeries and, erm, very nearly Iceland but try as it might, it has failed to knock the coffee shops off their perch. While Starbucks cut stores and Coffee Republic filed for administration, to hopefully emerge leaner and stronger, Caffè Nero and Costa have sat and watched sales sheets ticking over rather nicely, thank you.

"What the recession killed dead once and for all was the notion that coffee bars are in any way a luxury in terms of expenditure," says Caffè Nero business development director and founding father Paul Ettinger. "We're here as a necessary part of the British way of life. Our trading through the recession has been absolutely amazing, and it goes to show that people will give up Barbados, they will give up their Aston Martin DB9, but they won't give up their coffee shop visit."

Not even the economy has stopped people paying £1.40 for a single cookie. How did Nero manage that? "It's a big cookie, a good product..." says Ettinger. But surely the food team must have been tempted to hit the panic button when soothsayers briefly predicted a gloomy future for coffee houses last year? Ettinger speaks only of the positives. "One good result of the recession was applying that critical eye. We had some cakes in our selection that were big portion sizes. Great value. But was that putting off people on health grounds?"

And while the likes of Costa have been tempted into experimenting with meal deals, Ettinger remains unconvinced. "We don't do meal deals," he states. "It was easy to panic (due to the recession), and we realised that a £2 sandwich would be a very short-term strategy."

One area where the food team has clearly been frustrated is the slowdown in NPD, with new products becoming ever harder to find. "Five, six or seven years ago, there were lots of things that still hadn't been done," recalls Ettinger. "Now, there isn't that much. If you look at Italian cakes, most of them are not for the UK market at all. They might be different, but you're not going to sell them. But I'd hate to think that new product development had come to an end."

With a lower product churn than Costa, any new launches have to be spot-on. "In the old days we'd have a cycle whereby every month we'd have a new sandwich or panini, and perhaps three to four different products. But actually, once the customer finds something they like, they don't want to see it disappear," he says. This has led to a more considered approach to NPD. "If something comes in, it stays for quite a while. People love our big sellers, such as our chocolate muffin. We're not going to churn for the sake of churning."

"Here, we have three people working on food development, so we don't have a massive team of people to constantly go out and re-tender," adds head of food and beverage Neville Moon. He points out that the lead times for the food planning process are sometimes very long. Getting a sample on the table is easy, but getting that product into the stores in six months' time, with all the staff trained, all the point-of-sale material and packaging done is a lot of work. "Then we have to get the whole commercial team to buy into it, accept we have the right margins and negotiate that can be a long process. For a supplier, it's not easy," says Ettinger.

Suppliers can ease the process by doing their homework, he says. "You'd be horrified to know how many suppliers walk in and start talking about products that have absolutely no relevance whatsoever to the business. It's quite incredible. Like an American donut. It's just not going to work." Caffè Nero's food philosophy has always been very clearly delineated, he says: don't stick in lots of additives and colourants.

"Sometimes subtle changes can make someone walk that extra 50 yards," says Moon. That's usually the distance from one coffee chain to another and perhaps one reason why one half of the sector has ended a year of recession with an A+, while the other half comes under the 'must try harder' category.





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