It has a bold plan to expand its coffee and WCafe offering significantly…
A little over a year ago, Woolworths quietly opened a new-look WCafe at Waterstone Village in Somerset West, with a fresh offering aimed at capturing a share of the dinner market in the region. The new format store, which trades until 10pm, is officially a “test” but the group says there are more in the pipeline.
It takes the core WCafe menu and expands the offering from lunch substantially.
Think prawn avo ritz, 35-day matured rib eye steak, fish and chips, spicy kasi wings, rotisserie chicken, new options as sides, ice cream sandwiches (with its trademark speckled eggs) and malva pudding.
The store also has a wine and cocktail bar with a selection of classic cocktails and wines from its increasingly popular WCellar stores.
The choice of location for this test is telling, being diagonally across the N2 highway from Somerset Mall.
The area has some extremely well-heeled residents and there is a paucity of choices (aside from the dozens of wine farms on their doorstep).
In the centre itself, there’s only a Spur and a Hussar Grill. The nearest tashas are at Canal Walk and the V&A – a 100km roundtrip.
Part of the offering at the Waterstone Village WCafe in Somerset West. Image: Supplied
Menu pricing is in line with the prices you’ll find at its other WCafes (a burger costs R125), meaning that battered hake is around R150 and the 300g rib eye R200 (a full free-range chicken with BBQ, chipotle or peri-peri sauce is R395).
Diners can choose from various options, right up to a full free-range chicken. Image: Supplied
The décor is more ‘sit-down-and-dine’ than the current ‘grab-a-bite’ set-up in typical WCafes.
Turnover is up strongly since it opened in this format.
Woolworths’s food services unit includes its WCafes, coffee stands/pods and its Woolies NowNow takeaway stores. This unit generated around R1 billion in so-called ‘concession sales’ between July and June (its total turnover from food was R48 billion).
Clear ‘runway’ for growth
Group CEO Roy Bagattini says the food services unit generated 20% like-for-like sales growth last year, and it now has 100 WCafes and 100 coffee ‘pods’ or carts.
Given that it has 350 Woolies Food stores, Bagattini says there is clear “runway for organic growth to build a really big food services business which is anchored in and showcases our iconic food brand”.
Maybe later for ‘NowNow’
The only part of the food services unit, housed separately in its Woolies Ventures accelerator, which is not rocketing ahead, is the NowNow takeaway offering.
This is similar to what one would expect from a Kauai or Vida e Caffe, but it currently only has two outlets (at Canal Walk and Sea Point). Various attempts at getting a store to work at the V&A Waterfront have not worked.
Bagattini says the most difficult part of building out a food retail business “is setting up the back end”.
And: “We’ve already done all of that.”
It has built out a world-class supplier network and logistics platform to get the right stock to the right stores at the right time (ironically, this is an issue in its clothing business that will take a few more years to address).
He says it is difficult to “authentically replicate” and it is leveraging this to build out the food services business. Supplies get delivered to stores as part of its standard supply chain (which operates daily deliveries).
Tapping into alcohol
Beyond its WCafes, it continues to see opportunity in the liquor retail space.
Bagattini says alcohol – mostly wine – only accounts for 1% to 2% of its total food sales. For its competitors, this is higher than 10%.
It continues to roll out WCellar stores in markets where it makes sense. In Gauteng, it has expanded from Winifred Mandela Precinct (Nicolway) to Broadacres, Lonehill, Cresta, Lifestyle Crossing, Weltevreden Park and Brooklyn in Pretoria.
In Cape Town, it now has WCellars at Tygervalley, Worcester, Stellenbosch and Hout Bay, and there are even stores in Hazyview and Polokwane.
It is refreshing its core food offering, especially in its larger ‘The Market’ stores.
In its next generation format, coffee is moved to the front door and a kitchen and expanded deli counter will be “at the heart of the store”. The focus remains on fresh and other well-known Woolies categories, says Bagattini.
Six of its stores have been refreshed so far and these have seen a “significant uplift in sales”. Bagattini maintains that, even with the onslaught by Checkers, Woolies has the “best overall proposition in the market and is raising the bar in premium food retail”.