Specialist
Commercial Manager, UK & ROW at Pret A Manger Ltd
Agenda
- Footfall trends and trading dynamics through H2 2020
- Top line and margin implications for Greggs (LON: GRG)
- Greggs' competitive positioning and growth opportunities
- Food-to-go sector growth and recovery scenarios
Questions
1.
Could you highlight some of the key trends in the UK food-to-go market since we first went into lockdown in March 2020?
2.
Was there almost a full return to normal footfall levels in some Greggs shops when they were allowed to open fully just before the 2020 November lockdown? What percentage of customers and footfall returned?
3.
Have you noticed any change in average ticket size and spend per customer for those customers returning to stores?
4.
How did Greggs, Pret A Manger and the more traditional food-to-go players compare to the QSRs [quick- service restaurants] such as McDonald’s and KFC? Was there a significant performance difference between these two sub-categories?
5.
What is your outlook for a rebound in the sector, given your thoughts on fluctuating footfall and average spend as well as the difference between the performance of Greggs, McDonald’s, KFC and Pret? Do you expect it’ll rebound to pre-coronavirus trading levels in H2 2021 as the vaccine is rolled out? Alternatively, do you think it’ll take much longer?
6.
How has pricing developed through 2020? Have there been any price increases on coffee or food items? You mentioned the range has significantly decreased.
7.
You mentioned Starbucks and Costa’s pricing could direct the rest of the industry. Have you noticed any significant increase there?
8.
Have any of the key food-to-go players fared better than the rest? Could you expand on your assessment that Greggs fared better than Pret?
9.
What are your thoughts on Greggs’ strategy to sell products in Iceland? It’s done very well for it throughout coronavirus. Could it continue with this strategy post-pandemic?
10.
Do you think Greggs will expand beyond Iceland into other grocery competitors, such as Tesco or Sainsbury’s? Alternatively, do you think Iceland just suits Greggs’ model quite well? Pret and the other food- to-goes seem to be interested in expanding into grocery as well.
11.
Pret has struggled to serve other food-to-go sectors. Do you think this opens any opportunity for Greggs to take market share in regions that were under-penetrated pre-coronavirus? Do you expect it to aggressively launch into these under-penetrated regions through opening new shops or via delivery?
12.
Greggs’ brand proposition and offering are quite important for attracting new customers. It seems to have struggled lately to convince customers that it’s not just a value player and that it can compete higher up the price value chain. Why do you think it’s struggling with this? Do you think it’s worth it trying to target more affluent customer groups and increase its offering there?
13.
How does Greggs’ range compare with Pret, Costa and others in quality and price?
14.
Are there any obvious gaps in Greggs’ product range or anything you think would be a good fit for the brand?
15.
Do you think there’s growth potential for Greggs through its coffee offering? Alternatively, has it reached quite a mature stage already? Coffee is such an important aspect for all the food-to-go players and we know Greggs has put effort into building out its coffee offering.
16.
Do you think Greggs can improve its coffee offering by creating more coffee-related products or improving the quality of the coffee products it’s got?
17.
Do you think Pret’s subscription model would ever work for Greggs and its strategy? Do you expect Greggs or anyone else to implement that?
18.
Do you think there’s value in Greggs’ coffee offering?
19.
Greggs has partnered with Just Eat and it seems to be slightly successful, with about 5.5% of sales through the digital channel. How could this progress? Is there scope for Greggs to push more sales through digital?
20.
How profitable is the digital channel for a company such as Greggs, given that its items are lower-priced than other players’? Is it quite margin-dilutive? Do the economics stack up to push an online digital strategy?
21.
How has Greggs been agile during coronavirus? What have been the key costs incurred due to lockdown, especially around shutting down and restarting? Is Greggs at an advantage vs competitors due to being vertically integrated?
22.
Do you expect an increase in labour costs? There seems to be a bit of a labour supply constraint at the moment. There’s a demand for picking, especially with the delivery models, and it is competing against the grocers in that regard. Do you think this could impact players such as Pret and Greggs?
23.
Do you expect any cost-saving initiatives or cost-reduction opportunities for Greggs?
24.
Do you think Greggs would ever move to a model such as McDonald’s self-service checkout and digital screen ordering system?
25.
Do you think there’s an opportunity for Greggs to reposition itself in the city centres such as Canary Wharf and the City of London, where it’s quite under-penetrated? A lack of inner-city store footprint is actually a benefit for it now due to coronavirus home-working trends, but what about in 5-10 years? Would this be a good opportunity for it?
26.
What trends do you expect to shape the market for Greggs, especially in the food-to-go sector? Do you think there will be more focus on healthy products, given the significance of health during coronavirus?
27.
You mentioned Greggs has really built its reputation on that legacy sausage roll, as well as by convincing the public that it is quite a healthy option. How much run rate do you think it has with the sausage roll? Do you expect it will have to come up with an exciting new product development to sustain the growth that’s previously been accentuated by the sausage roll?
28.
What do the summer months mean for Greggs, given the UK government’s coronavirus exit plan? Is there any seasonality that affects trading for the food-to-go sector and Greggs specifically?
29.
Do you think the pent-up demand from coronavirus will be spread evenly across all the big players such as Greggs, Pret, Costa and Starbucks? Alternatively, do you think Greggs could do slightly better, given that we are exiting the furlough scheme and there might be pressure on the UK economy and some consumers?
30.
Has there been any player recently that you think has proven itself to be more agile than you might have expected?
