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New research reveals evening trade worth £758m for cafes

22/08/2018
New research reveals evening trade worth £758m for cafes

Evenings represent a huge growth opportunity for coffee shops, with new figures from market research and consumer trends firm NPD revealing that there’s an additional 129m out-of-home (OOH) occasions worth £758m ripe for picking.

Dominic Allport, insight director at NPD, told Coffee Business World that currently visits to coffee shops, as part of the total OOH eating and drinking occasions throughout the day, represented 6% but this dropped to less than 2% between 5pm and midnight.

“It’s about creating those in-between spaces amid the traditional coffee shop on the one hand and the pub on the other. There’s a real opportunity for spaces that appeal to workers, particularly in London, who after a long day in the office want somewhere that’s nice to go to – a bit premium in its offering - where they are looked after and can get a higher quality experience,” said Allport, adding that trends in London usually percolated out into other cities and towns.

He continued that while opportunities existed, there wasn’t a “one size fits all” formula, but a premium alcohol offering, table service and entertainment were all worth considering. “There’s definitely a market between 6pm to 8pm or 9pm, after which time people begin to drift away. After 10pm I’d say it’s a case of diminishing returns.”

Notes Coffee, with 10 sites in London, is one operator successfully trading until 10pm on key evenings (Thursday and Friday) in all but its kiosk spaces.

“Evenings aren’t about coffee but about alcohol – craft beer and cocktails,” said Notes’ co-founder Robert Robinson. “We make a lot of effort to change the atmosphere and create a different environment, so people don’t feel they’re spending their evening in the shop they buy their flat white from in the mornings!”

Creating a successful chameleon operation included changing everything from the lighting to the music to the food offer.

Robinson continued: “We make coffee far less prominent after 5pm and we stop taking orders at the till, moving over to table service, along with new menus and even candles.”

New sites were always busier in the day, he added, but cross-promotions and offers of evening discounts helped build up a successful evening trade, where the spend per head was higher.

The Gentlemen Baristas’ director and founder Henry Ayers agreed that diversification was key to survival and growing the business. “Pubs have really upped their game when it comes to the coffee, so cafes need to think about offering alcohol in the evenings and improving their food offer for take-out, eat-in or in the evenings.”

However, Ayers added, the move to evenings in its Union Street site wasn’t a success. “We were doing an evening service there, but pulled back because of all the competition. Instead we’re focusing on affordable prices and locally sourced goods, and so on.

“Unless you have a captive audience, you have to think carefully about how to expand your offer.”

Co-founder of Artisan, with four sites in South West and West London, Edwin Harrison said: “It’s a really interesting topic that everyone’s thinking about. When we started out, we thought we would open in the evenings because the shop in Australia that inspired us was pumping trade at 10pm each night. But when it came to the market here, we found that people weren’t interested.

“We have tried opening until 7pm, but there wasn’t any trade after 6pm.

“There’s a good reason to try it, because you’re maximising your return on rents, and more hours generates more profits, which has got to be good. But what tends to happen is that by opening later you muddle what’s unique about your offer in the customers’ eyes. It’s hard to create something that satisfies both those coming in the evening and during the morning, and the risk is you end up getting it wrong and losing both,” said Harrison.

He continued: “There are a few fantastic examples out there, like Grind… but for me personally it’s got to be about lifestyle too. We work hard to run our business to the best of our ability from 6am until 7pm. If we opened 7pm-11pm, it would break us. There’s already so much pressure on the founders/operators of independents.”

Instead, Artisan has grown its business by adding a coffee training school and its own roastery.

Midlands-based BEAR, on the other hand, is showing evenings can be profitable outside of London.

BEAR, which is set to open its third site in Stone, Staffordshire, in October, trades into the evening at both its other sites: in Uttoxeter until 11pm on Friday and Saturday; and in Derby until 9pm Monday-Wednesdays and 11pm Thursday-Saturday.

“When we started the business, we always wanted it to be a place that progressed from the mornings into the evenings. It has been a journey for us and we are learning how to add value to the business all the time. We’ve learned that it’s not enough just to be passionate about products but also about the space; high quality products are our passion, but it’s all pointless if the space isn’t inviting.

“Success is about getting the space and the staff right. Creating a space where people want to socialise, spend time together. We’re not a nightclub, but a social space when people can enjoy drinking coffee or cocktails, along with smaller plates and lighter meals to share.”

BEAR has created a £5 cocktail range, lower in alcohol content, which provide an affordable night out and encourages people to drink responsibly.

“Derby is definitely a pre-night out destination on Thursdays to Saturday, whereas on a Monday it’s not as busy, so we make the seating more intimate to make the space work.”

NPD research also showed there were opportunities for growing coffee sales too after 5pm, with research showing that 30% of all daily OOH coffee drinking occasions were taking place between 5pm and midnight.

  • Share your experiences of trading in the evenings by emailing Coffee Business World editor Kate Oppenheim here.
  • Notes' Robert Robinson, The Gentlemen Baristas' Henry Ayers, Artisan's Edwin Harrison, BEAR's Craig Bunting and Grind's David Abrahamovitch are all members of the European Coffee Expo Steering Panel.
  • European Coffee Expo takes places on May 21-22 at London Olympia. Click here for more information.

 

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