Coffee and sandwich shops among strongest performing channels

The report, Winning in Coffee and Sandwich Shops October 2022, crunched data up until August 2022 and found these channels were able to capitalise on quick service operations.

This was achieved by concentrating on physical expansion, new site diversification including drive-thru and smaller format stores, the exploration of omnichannel routes including delivery and retail, low-cost purchases, digital kiosks and ordering, loyalty programmes, premiumisation, and offers, the research showed.

But while coffee and sandwich penetration peaked at 20.4% - mirroring the total eating-out market in April 2022 - the channel saw a gradual decline into the summer months, as consumers “became more cautious following energy price caps and increases in national insurance contributions” and fell back to last year’s figure at 15.5% in the face of increasing cost pressures.

Although coffee and sandwich shops were the leading channel in the total eating and drinking out market over the last quarter, they have since experienced a -2ppts share loss, and are now in second place behind QSR.

Consumers are instead moving to lower-cost retail (up +2ppts on the last quarter) for affordable meal deals, the report suggested.

The report also found that snacking occasions had seen the biggest boost in share, up by 2.4ppts in the latest quarter, driven by more consumers seeking small affordable treats during or after work amid the rising cost of living.

This has come at the expense of drink-only occasions, which have seen a drop of -4.1ppts as people cut back on drinks out of home following price inflation across coffee and sandwich shop menus.

Snacking is doing well, by simply being the cheapest occasion. “Interestingly, as it’s cheaper, it’s the only occasion shoppers are spending more at, with a 6.7% increase vs last quarter,” stated the report.

“This, therefore, presents a real opportunity to push treat-led snacking and a great day part to target to offer trade up.”