British Baker launched its league table of the UK’s bakery, café and takeaway outlets in 2007. Since then, the big question on everyone’s lips has been how long can Greggs, at number one, keep Subway at bay?
For Subway has been haring along, adding franchise outlets, 240 in 2007 for example, while Greggs has grown at a more sedate rate, adding 50 or so outlets a year.
Subway was only 10 outlets behind Greggs at the end of 2009. But half way through 2010, the league table shows Greggs still sitting pretty at number one, with Subway adding only one outlet in the course of 2010 so far. A Subway statement says: "This year the Subway chain’s main focus has been to create an even better experience for our customers in order to drive sales and strengthen the existing franchises." It does not have any current estimates for store openings this year, it adds, although there is a "strong pipeline of potential franchisees".
Subway may be pausing for breath, but the rest of the businesses in the Top 10 of the BB75 league table of bakery and café retailers are pushing ahead, despite the economic downturn. A half-year update to 1 July 2010, looking at the Top 10 of the list the corporate end of the market sees a very similar order to the names as at the start of the year.
Greggs continues to make steady progress. Chief executive Ken McMeikan comments: "Our plans to open more than 600 new shops across the UK in the coming years have progressed well in the first half. As well as traditional high street locations, we are opening more shops in locations where customers work and travel, such as industrial estates, airports, railway stations and bus terminals."
Greggs perhaps needs to start looking at Costa in third position as its new bête noire. The Whitbread-owned coffee chain has added 72 shops to its port-folio in the course of six months, with another 58 openings planned in the UK this year. This growth includes adding stores in retail outlets, such as its partnership with Tesco, as well as hospitals and universities.
Costa, of course, already has an arch-enemy in Starbucks, with Caffè Nero its other main competitor. The rivalry between these three café chains led to a public skirmish recently, when Starbucks complained to the Advertising Standards Authority about a Costa campaign. This boasted ’Starbucks drinkers prefer Costa’ and ’Seven out of 10 coffee lovers prefer Costa’. Last month the Advertising Standards Authority upheld Costa’s claims, ruling that they were based on independent blind-tasting tests.
However, not such good news for Costa is the fact that Starbucks seems to be putting its problems of last year behind it. It says it has had a good year so far in the UK "as customers respond to the many changes made to the business". The firm added a net seven outlets in the first six months of the year, closing down a number of sites. Some 17 new Starbucks stores opened at Welcome Break in the first half to the start of July. By this month the total is 34.
Yet 2010 may also be remembered as the year the coffee brands turned bashful. The giants of the sector have been falling over themselves to unveil formats where branding is played down. Starbucks, which has 17,000-plus outlets in 49 countries worldwide, combed the local salvage yards to fit out its new retro concept café in Edinburgh. This is one of a series of trial shops around the world; the first one in the UK opened in London’s Conduit Street at the end of 2009.
The makeovers are part of a bid to make sure that no two Starbucks are the same, it says. The site is decorated using locally sourced and recycled materials, including reclaimed vintage floor tiles and items from Edinburgh antique shops and salvage yards. It includes a library area with books from the local Oxfam and Barnardo’s shops. The Edinburgh store, one of around 50 Starbucks coffee houses across Scotland, forms part of a £24m project to refurbish around 100 Starbucks stores across the UK by the end of September 2010 (a fifth of those in Scotland).
Costa, which has now racked up nearly 600 international outlets, plus its 1,106 in the UK, also recently unveiled a new ’Metropolitan’ format. This outlet went on trial in London’s Great Portland Street in July. The format has what is described by Costa as "a toned-down reference to the established Costa brand". "This together with radically new furniture, sophisticated and quirky feature lights and bold artwork conveys a feeling of uniqueness," it says.
In early autumn, it will overhaul a store in the City of London, which sees a high volume of takeaway sales. Using the ’Metro-politan’ concept, the design and layout will aim to increase speed of service for customers.
Caffè Nero, meanwhile, has opened 40 outlets in the UK so far this year, bringing its total up to 440. It also has 14 in Turkey and 12 in the UAE. Director Paul Ettinger says it plans to open another 45 over the rest of 2010. Trading so far this year has been positive, with like-for-like sales growth in excess of 2%.
He comments: "Costa is our key competitor as an Italian coffee house. It is on a very fast track in terms of percentage growth. The market is very stable, the laws of economics state that there is room for three strong competitors and it is incredibly difficult for others to break in."
An updated design has been launched in two locations in London. Caffè Nero’s new design also plays down the branding, with new design, materials colours, furniture and flooring used, says Ettinger. "We felt it was time to experiment a bit more."
It’s a satisfactory situation, particularly in a recession. M&S Café and BP Wild Bean Café are also pressing ahead with growth plans, as is Pret A Manger. Meanwhile, Sayers the Bakers, which has had its share of financial worries in the last few years, is holding its own at number 10, on 150 outlets.
But no-one in the sector has any reason for complacency. Competition from new markets the likes of McDonald’s and pub chain Wetherspoons for example is hotting up, as they step into traditional bakery territory. Wetherspoons, for example, now sells hot drinks, biscuits and flapjacks, as well as a range of sandwiches and paninis. It recently launched a 49p coffee and announced plans to target the breakfast market.
Rank Name Outlets January 2010 Outlets July 2010
4Starbucks Coffee Company681688
7BP Wild Bean Café278286
8M&S Café 277283
9Pret A Manger205209
10Sayers the Bakers150150
13BB’s Coffee & Muffins 50100
14Coopland & Son (Scarborough) Ltd8398
15Cooplands (Doncaster) Ltd7586