Food fight: The other British bake-off

  • Published
A Domino's Pizza cook flips dough in the airImage source, Domino's Pizza
  • Food service has been through several sharp changes through the pandemic, and companies have had to respond quickly.

  • Domino's has emerged well, but faces much stronger competition now that restaurants have geared up their home deliveries.

  • Greggs is seizing market opportunities in several directions, taking on cafes, evening business, vegan and low-income neighbourhoods.

It wasn't just viewing figures that hit record levels when England played Scotland in the Euro football finals. It was also a record evening for ordering in Domino's pizza.

What better way to celebrate two nation's identities than with an Italian dish? And what a picture that paints of a nation that has spent much of the past 17 months watching TV and scoffing.

Our eating habits have been changing fast over these months, shaped by what governments have been allowing us and caterers to do.

Not being allowed to eat out forced restaurants to pivot swiftly to home delivery. Entrepreneurs turned up the heat in their kitchens.

When we were allowed out at least for collection, McDonald's was rammed with families in cars, and restaurants re-opened but on limited hours and days because they couldn't and can't get the chefs they need.

They literally couldn't stand the heat in the kitchen, and can see better opportunities elsewhere - many of them in their European homelands.

Pizza delivers

Two firms have revealed some secrets of the trade, providing interesting lessons in how to lean in to the challenges of an unprecedented downturn and closures, and to come out of it apparently stronger.

Domino's is one. It had to stop pizza collections last year, and shift to delivery only. While others in food service were facing their worst nightmare, Domino's was cooking up some healthy, crusty trading figures and results.

Image source, Getty Images

It was investing in its app. A company that was built by phone now takes 93% of its UK orders digitally.

Investment also reached Lanarkshire, with a new "state of the art supply chain centre" in Cambuslang.

Collections are back, but at lower levels than pre-pandemic. Deliveries have taken a 9% slip this year, with total orders up 14% to £752m in the UK, up by 20%.

The challenge now is to face up to a restaurant sector which is much more integrated than before the pandemic with delivery specialists Deliveroo, Uber Eats and Just Eat.

Domino's delivery used to be its strongest selling point. Now, it's in a very crowded market, so it is spending big on marketing and emphasising an average 25 minute delivery time.

It also says its integrated supply chain has been important to ensuring it can meet the unprecedented peaks of demand through the Euro finals.

Is that enough in this competitive field? Stock analysts at Jefferies think not. They note that sales are up by only 5.5%, and judge it to be "underperforming".

Imitation meat

Then there's Greggs. It pulled off the clever trick of being perceived as as much a Scottish brand as Irn Bru, while axing the Scotch pie six years ago and being based on Tyneside.

It also successfully reinvented itself. Greggs used to be a bakery. I recall that it did a fine, malty brown loaf. Not any longer. It's "food to go", and increasingly it's food for click and collect, or for delivery. And at some scale: half year sales returned to the 2019 figure of £546m, and with a higher pre-tax profit of £55m.

Image source, Getty Images

It was another company that pivoted quickly to the lockdown challenge, partnering with Just Eat to boost deliveries last year. When collection was allowed, it had invested in the software to make that click.

Costs have been cut and the supply chain has had investment, including a frozen goods distribution centre on Tyneside.

With results for the first half of this year, Greggs reports on lagging figures for rail and airports, for obvious reasons, while footfall has improved most strongly where cars get access. The big boost is in service stations and retail parks.

Innovation is in improved options on coffee, where so far it has offered strong price competition but not the range of the big coffee chains and independent cafes.

With click and collect has come an opportunity to customise pizzas, putting it into competition with Domino's.

It is looking to introduce longer opening hours, competing with restaurants through the evening, where it is "under-represented".

Image source, Greggs

Heading in yet another direction, it is mopping up sales in lower-income neighbourhoods with a handful of Greggs Outlet stores, selling cut-price produce.

And having scored a huge PR hit with the vegan sausage roll, it is now moving on to further plant-based imitations of meat. As of this Thursday, you might be able to purchase something called a 'Vegan Sausage, Bean & Cheeze Melt'.

Opportunity knocks

With 2,115 outlets across the UK, Greggs aims to open 100 more this year, creating 500 jobs.

And the really interesting observation with the half-year update is that the downturn and recovery has opened up markets.

Retail rent, notably in central London where the firm has very limited presence, has been getting much cheaper. Rivals have been thinned out.

The company sees an opportunity to push its outlet total up to 3,000.

For the nimble, the brave, the disrupters and the deep of pocket, this can be a time to grab opportunities. And that's not just with steak bakes, vegan or otherwise. It's true in sectors across the economy.