ESA Food-To-Go Market Tracker
The latest Food-to-Go report is now available, offering our subscribers important insight into the pricing strategy of the leading coffee shop and quick service restaurant operators.
As the key Christmas trading period gets underway, we’ve taken a look at how market data is enabling ESA’s clients to stay ahead of the competition.
With the number of high street coffee shops reaching record levels and competition from less traditional operators increasing, the UK’s leading coffee specialists are looking outside of their core business to drive expansion.
The announcement that Whitbread plan to sell Costa to Coca Cola for £3.9bn is likely to see Costa branded ready-to-drink products go head-to-head with Starbucks for space on supermarket shelves.
Travel is seen as another route to growth, with Starbucks, Costa and Pret all increasing their presence at motorway service stations with both traditional and drive-thru format stores.
Meanwhile, the growth of independent coffee shops and kiosks targeting commuters with their emphasis on speed of service and quality of product represents a challenge to the traditional market leaders Costa, Starbucks, Nero and Pret.
National chains have responded to this threat by opening new small-footprint shops and by reviewing their existing estates based on store performance and customer footfall. Furthermore, investment in technology allows greater engagement with customers through in-app purchases, pre-ordering of drinks and special offers.
Getting the basics right
However, ESA Retail’s coffee shop customers recognise that getting the basics right remains key to both fending off new market entrants, and maximising sales through their existing estates.
Product range and pricing remain as important as ever when it comes to retaining customer loyalty and driving new business, particularly as coffee specialists aim to grab a greater share of lunchtime food spend.
The implications of getting pricing wrong can be significant. With leading chains selling up to 500 million cups of coffee per year, failing to push through a price increase of just 10p can translate into £5 million of lost sales.
Understanding the competition
ESA Retail’s Food-to-Go Market Tracker, a syndicated bimonthly pricing audit service, enables our subscribers to stay ahead of competitor pricing and range changes.
The Market Tracker report provides insight into important differences in the Food-to-Go offer of the leading Coffee Shop and Quick Service Restaurant (QSR) operators, including:
o Full sku-level product range, price and promotion data for 11 leading coffee shop and QSR operators
o Insight-led dashboard reports, built from the ground up for research professionals and decision makers
o Coverage of multiple channels and geographic regions, providing a comprehensive picture of operator behaviour
o All data captured via bimonthly store audits, completed by ESA Retail’s experienced field team, using industry leading data capture tech
We've taken a closer look at the Hot Drinks category within the leading coffee specialists to demonstrate the type of insight that can be derived from the full Market Tracker report.
As you would expect, the major coffee shop chains offer the widest range of Hot Drink products. However, there are some significant differences between brands, with Starbucks (60 products on average) offering more than three times the choice found in Pret a Manger (18 products).
Key differences are also apparent in terms of pricing, with Pret the only coffee specialist to offer a hot drink below £1 – Pret Filter Coffee was sold at 99p across every channel and store format.
Our analysis shows that 8 out of 10 Hot Drinks offered by Costa were priced between £2.00 – 2.99, with only a handful of products over £3. This approach is also followed by both Caffe Nero and Pret, with more than half of their hot drinks priced between £2.00 – 2.99.
Starbucks stand out amongst the leading operators in pricing more than 50% of their hot drinks at more than £3.
Customers visiting the coffee specialists away from the high street are faced with paying a premium for hot drinks, with higher prices driven by increased operating costs and often set by local franchise operators, rather than national brands.
Costa, Starbucks, Nero and Pret all charged more for a Cappuccino in Rail and/or Motorway locations. On average, this premium was 12% - 28p per cup - in rail stations and even greater in motorway services at 29% - an extra 67p.
Finding the right balance
National operators face an ongoing challenge as they push to increase their presence within Travel, while pivoting into FMCG ready-to-drink ranges and defending core city-centre trade from the rise of independents.
Customer perceptions of price and brand value will remain key to winning on all of these fronts, and the insights available from the ESA Food-to-Go Market Tracker provide our customers with the insight they need to plot the right course.
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