What Le Pain Quotidien got wrong (and others are getting right)
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Simon Stenning, founder of strategic analysis consultancy Future Foodservice, discusses whether the recent failure of Le Pain Quotidien indicates wider problems for the UK bakery café market:
“It is always sad news when any business goes into administration, but it wasn’t much of a surprise when Le Pain Quotidien (LPQ) announced the closure of nine out of its 10 UK stores – the site at St Pancras remains open as it is operated by a separate company.
The closures were reflective of several factors and a situation that has been exacerbated by recent major global events.
LPQ is predominately based in central London, with just one site in Oxford. Foodservice businesses in the capital are affected by footfall and especially by tube usage, which is still 10-15% lower than 2019 and experiencing different patterns of business from both workers and shoppers. London has also been affected by a slow return of inbound tourist trade, with 2022 seeing approximately 15 million fewer tourist visits than in 2019.
LPQ has a slightly confused offer, where it sits half-way between a coffee shop and bakery, and an informal restaurant, as it has a full kitchen and menu and is open from 6.30am through til 9pm. This could be a strong point, as it fully utilises the property space throughout the day. However, if consumers are not sure what the offer is, then this can just add to costs.
LPQ is quite a traditional brand, which hasn’t been updated for a long time and is out of kilter with current trends. Consumers have wider repertoires than ever before, with a greater range of competitors available to them. If the concept isn’t quite right and the brand is outdated, then it can quickly lose appeal, and custom.
So, when global macro factors such as rising costs, staff shortages, high energy costs and squeezed consumer discretionary incomes hit and impact a business which doesn’t have a relevant concept and is losing appeal, it is going to suffer financially, and eventually lead to closure.
And yet other bakery brands are powering ahead, including the following examples:
There is an array of successful bakery brands thriving in the UK market at the moment, and indeed in London, and so LPQ failing does not indicate specific problems for the Bakery Café market. Everyone is experiencing the same global macro factors, and yet some are finding ways of punching through.
Any brand can fall in the same way as LPQ, if the brand loses relevance, if trade takes a hit from external factors, or if the balance sheet is debt-laden. This case shows how hard it is to be successful, when consumers are more fickle, when behaviours change, and when macro-economics work against you in pushing up costs and squeezing discretionary incomes.
So well done for those brands pushing ahead. It’s not easy to do.”
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