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April 11, 2014

Editor’s viewpoint: Tesco’s food-to-go push looks foolhardy

Tesco is reportedly looking at rolling out a food-to-go concept in London in its latest bid to try to find some growth in its domestic market. But, if the move happens, is it really wise to enter such a competitive space?

By Dean Best

Tesco is reportedly looking at rolling out a food-to-go concept in London in its latest bid to try to find some growth in its domestic market. But, if the move happens, is it really wise to enter such a competitive space?

The Guardian last night (10 April) reported Tesco is working on developing a “high-street takeway-food chain” for the UK capital.

It cited retail analyst Steve Dresser of Grocery Insight, who said Tesco could open up to 80 outlets in London.

When contacted by just-food today, Tesco refused to be drawn on the claims. “We’re not commenting on these reports,” a spokesperson said.

In any case, the reported initiative is puzzling. If it does get off the ground, the outlets will be competing with some established names in this part of the sector – focused food-to-go chains like Pret a Manger and Greggs, as well as Tesco’s more traditional rivals like Waitrose and Marks and Spencer.

The purported scheme is the latest Tesco idea to try to revitalise its domestic business. The UK’s largest retailer bought restaurant chain Giraffe last year, which followed investments like its 49% stake in coffee shop chain Harris and Hoole.

Those moves appear stronger. Tesco has put some Giraffe foodservice areas into its existing stores, which, although not on the scale of the in-store eating offerings of Sainsbury’s and Morrisons, demonstrates a supermarket shopper does like the possibility of eating on premises.

However, Tesco, if the claims are true, would be entering a space in which rival Sainsbury’s failed in recent times.

In January 2011, Sainsbury’s launched a store concept called Fresh Kitchen on London’s Fleet Street. The store featured a canteen-style cafe with the menu including hot chicken baguettes, salads and wraps.

Within weeks, there were reports Sainsbury’s could look to roll out the chain to as many as 200 sites but, speaking to just-food that May, chief executive Justin King indicated how much supermarket operators have to learn about such concepts and was very cautious about Fresh Kitchen’s prospects.

By March 2012, Sainsbury’s closed the Fresh Kitchen outlet and put any plans for any other outlets on ice.

It is a very competitive space. While one can understand Tesco trying to seek out potential areas for growth given its recent travails, a concerted move into food-to-go, a channel with well-established, well-known competition, would seem a unwise move, even for a retailer of its clout.

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