Reactions to Tesco’s acquisition of Giraffe Restaurants – announced 13 March – have predictably been very mixed. The rationale for Tesco’s investment in the Harris + Hoole coffee shop operation has not convinced many observers, and here’s another major investment in an operation which most would not regards as a ‘core strength’ of Tesco
On the other hand, and as Marc Sidwell writing in CityA.M. points out, Tesco has a subsidiary that offers a precedent: the Dobbies chain of garden centres. Dobbies has 32 branches and 16 million customers a year – and not only sells plants but provides venues that families visit not just to shop but to enjoy attractions (such as live animals) and – crucially – to eat. 20% of sales are apparently generated by its restaurants.
If Tesco could generate just 5% of sales through restaurants at its nearly 3,000 stores worldwide, the turnover would dwarf that of most international food operations. With Harris + Hoole and the Euphorium bakery chain also potentially poised to move into the larger stores, Tesco could rapidly become a considerable force on out of home eating.
And Tesco is also aware of the wider changing pattern of food retailing: what impact will online ordering have on its stores, how can they continue to attract footfall, what can they do to attract and retain customers?
Kevin Grace, Group Commercial Director at Tesco blogged on this subject yesterday, reinforcing these thoughts. His words appear under the headline: Retail destinations
“In January, Philip (Clarke, Group Chief Executive) blogged about our investment in the coffee shop start-up, Harris + Hoole. He talked about loving the stores we have and how we’re investing to make them even more appealing destinations for customers to come to.
“Since then, we’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop. With more general merchandise moving online, we have a great opportunity to rethink how we use the space in some of our larger stores.
“To put some of that thinking into context, it might be useful to think about the many different shopping malls around the world. In most cases, their food concepts are excellent and it’s one of the main reasons people go there. Let’s look at two examples. Lots of our larger stores in Asia have restaurants regularly used by customers to meet their friends and spend time together; people like being able to take a break and relax after their shopping trip. Similarly, if you’ve ever visited Westfield, you’ll know that people go there to meet, eat and drink as much as they do to shop. They have a fantastic collection of restaurants – around 50 different concepts serving fresh, quality food and a variety of cuisines. The brands are accessible yet aspirational and the comfortable dining space allows customers to relax, socialise, recharge. It’s not an afterthought – it’s central to their offer.
“There’s no reason that supermarkets can’t offer something similar here. At the beginning of the year, we approached Giraffe Restaurants to see if they’d like to be part of the hospitality offer in some of our larger stores. Why them? Well, they’re a family run business with a strong brand and a fresh, seasonal, quality menu that has something for everyone. Where possible, they’ll sit adjacent to or outside the main Tesco store – we want the dining experience to feel separate from the weekly shop because it’s a place where customers can take a break and relax. They’ll keep their unique look and feel because it’s part of their brand and customers like it….
“We’re really excited to see our first Giraffe open later this year – remember to let us know what you think.”
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