Coco di Mama has announced the launch of a range of freshly made Italian sourdough sandwiches in Tesco’s premium meal deal as it bets on the grocery market.
The launch follows a “hugely successful” debut year in retail with its range in Sainsbury’s’ £5.50 meal deal.
“Capital-light, fast-growing channels,” are the focus of the brand at the moment, says managing director Jim Atwood.
“We [have] confidence that there’s something in that brand, the packaging, the brand DNA, that the premium but affordable Italian ingredients,” he adds.
Coco di Mama first branched out into meal deals after the pandemic, when the business was “turned upside down”, Atwood says.
The company started with just one van, bypassing Sainsbury’s delivery chain and moving its baguettes and salads all around Central London to individual stores.
“We started off with 10 in central London, where we already had high brand awareness,” Atwood explains.
The idea had such a high sales rate that Coco quickly expanded outside London: In about six months it got to 140 delivery kitchens nationwide, and Coco is now in 2,200 supermarkets.
The market is ‘incredibly competitive’
It makes sense that Coco di Mama is expanding into capital-light models: A post-pandemic shift to flexible working, as well as a long cost-of-living crisis that high rents and mortgage rates continues to keep alive, has made it more difficult to operate stores.
Pret a Manger made headlines earlier this week when it wrote off a third of the value it was handed after its 2018 acquisition by European investment group JAB.
Pret attributed the write down to higher costs due to an increase in national insurance contributions, as well as still-high interest rates and an uncertain global macroeconomic environment.
While Atwood says it’s “much better” than it was during and just after the pandemic, the market is still “incredibly competitive”.
Along with high costs, there’s still uncertainty around working from homes habits, with employees and bosses clashing in flexible patterns.
“[So] pivot the brand into capital lite fast growing channels, which is where we see the medium to long [term],” Atwood says.
“[Maybe further down the line… we might try some store footprint once more, but for the time being, it’s retail, delivery, kitchens and travel franchise,” he adds.
Taxes pile pressure on hospitality
A £20bn tax raid last Autumn stung hospitality particularly hard, while upcoming changes to business rates are set to rub salt in the wound, with London alone facing a £2bn cost increase.
The increase in employer’s national insurance payments (NICs) last Autumn, and lower threshold at which employers had to start paying the tax, hit employers which rely on part-time and lower-wage staff.
Job losses have soared since last Autumn, with the sector bearing “the brunt” of the pain.
The scale of job losses is three times worse than estimated by the Office for Budget Responsibility, which predicted 50,000 job losses as a direct result of changes to employer NICs.
UK Hospitality has estimated that the cost of employing one member of staff has gone up by £2,500 per year.
“Employment costs have gone up “significantly”, Atwood said. “We’re hoping that we might get some benefit and the autumn budget around rebenchmarking of rates for High Street businesses.”
“It’s always been challenging to operate hospitality businesses [and] t’s no easier now than it has been,” he added.
Hospitality businesses have struggled with a series of crises in the last five years, as the energy crisis and cost-of-living crisis immediately followed on from the pandemic.
But Atwood is optimistic about the future: “Strong brands [that are] well operated, as well as smart decisions and prioritizing your capital investment… and above all, trying to give your guests a fantastic product or experience… should win out.”