Value is the driver
A tranche of quoted results and trading statements last week gave a decent line of sight on who is performing well in these straitened times. The oft-quoted Aldi effect is providing a degree of out-performance for those operators able to offer good value to cash-strapped consumers.
Whitbread earned the best-in-class rosette with an impressive 4.4% increase in like-for-likes. The trading result was a little surprising given above-average price points at Beefeater and Table Table.
However, chief executive Alan Parker was stressing the importance of introducing lower-priced menu items in these value-conscious times. A Cornish pasty with chips and baked beans is flying out the door. Brewers Fayre's two meals for £9 was also going well. Cover growth was up by a handy 9.3%.
There are tantalising suggestions, too, that its new all-you-can-eat Taybarns format is shaping up to be a blockbuster, tapping into a deep well of demand. In fact, reports from the front line suggest Whitbread's first all-you-can-eat Taybarns site in Swansea might have been a subdued opening with just 6,000 covers a week. The new Barnsley site, one of five more opened before the summer holidays, is now turning over an incredible 8,000 covers a week. At an average of, say, £8 a head including drinks, that would make for takings in excess of £60,000 a week. Two industry contacts report that customers are having to park several streets away because the car park is so full.
Parker was asked specifically about Taybarns by one analyst last Thursday, but declined to be drawn saying only that early results were "encouraging".
Whitbread would be looking to expand numbers next year, "but not before", if results continue to be good, he added. It is, in my view, the must-monitor concept in the sector at the moment, combining great value with freshly-prepared food, variety and convenience. Whitbread is doing the right thing, though, in making sure all lessons have been learned before any cranking up of its expansion.
JD Wetherspoon (JDW) picked up second place in last week's roll of honour by moving overall like-for-likes marginally into positive territory last month. Chief executive John Hutson credited its afternoon cod and chips for £3.10 offer for creating sales momentum during the spring.
Peg prices
The company also cleverly moved during August to press consumer price-sensitivity buttons by promising to peg prices on 12 key products until the end of March 2009. But what was clear from last Friday's results meeting was that the company had benefited from working hard on retail offer improvements.
A wine festival had pushed wine sales positive year on year, while its traditional beer festivals had helped create a 6.2% increase in real-ale volumes. Greene King's results were only slightly less creditable, boosted by its food-led managed houses, but hampered by exposure to the wetter community market.
The size of the task facing Spirit's new boss Mike Tye was underscored by a very disappointing 3.3% decline in like-for-likes in the year to 23 August. The company would have been hoping for a much stronger performance during the summer after lapping the start of the smoke ban. What became clear last week was that Whitbread, JDW and Greene King are taking market share, albeit with a degree of margin sacrifice. Spirit's performance, as Mike Tye acknowledged in an internal email, needs to improve.
The north-south value-offer divide
Why is it that some of the biggest managed companies' value offers struggle to make their way down south? Whitbread's six Taybarn sites are all a long way north of Watford.
Mitchells & Butlers' (M&Bs') bargain carvery offer is nearing 100 sites after massive expansion this year. It has the company's highest cover turnover with an average of 3,200 covers per week — it costs £3.50 for a carvery during the week. But it has almost no penetration in the south-east.
There are 46 in the north, 23 in the Midlands, and just six in the Home Counties. There's not a single value offer, for example, in the whole of Brighton, plugged into a pub with a decent-sized car park. I know because I was looking for one on Sunday. We're looking to make savings in the south-east too, fellas.
