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Morning Briefing for pub, restaurant and food wervice operators

Sun 15th Mar 2015 - Pod to extend Starbucks link-up after successful trial period
Pod to extend Starbucks link-up after successful trial period: Healthy eating brand Pod, which operates 23 sites, is set to extend its relationship with Starbucks after a successful trial in three of the company’s London stores. As part of the pilot programme, which began last September, Starbucks replaced its full food line-up with Pod-branded hot and chilled food products. Pod founder Tim Hall said seeking such relationships made sense because very large property price rises made it increasingly difficult for smaller brands to expand. “The number of offers that are now being made for a good 1,200 square foot sites on prime London streets is crackers. We used to be able to pick up these sites for £80,000 to £90,000 per annum rent but now you pay £150,000 plus £100,000 premium. The scale of competition is huge and I’ve never seen it like this before,” he told delegates at the Propel Multi Club Conference. “It inevitably leads to partnerships. Big brands may not have the product but they have the sites. Link-ups provide opportunities for innovative brands in this sector.” He said extending the relationship with Starbucks was “a thrilling prospect for us”, and that it presented a solution for what was one of Pod’s biggest challenges – expansion, despite “excellent” trading involving double digit sales growth since 2013. “Starbucks has taken all its food out at these three stores apart from patisserie and impulse lines. This is the first time in the world that Starbucks has sold ‘hot held-food’. The entire chilled food range is also Pod-branded. It’s a solution to the biggest challenge we face – scale and property. Starbucks has 28,000 stores so it could be a very exciting thing for us. We see Starbucks as our internet if this was to work. The healthy fast food trend could proliferate through-out that model – and that could be a very exciting thing for both businesses. Currently the trial is going very well and in two weeks we will announce the next step with that partnership. The degree to which Starbucks is open to our suggestions has amazed me. They are asking us about how they can use our brand to change customers’ perceptions in their stores – it’s very impressive how open-minded they are. Pod-branded product sells in significantly higher quantities (than Starbucks-branded food in the three stores).” Hall argued that partnerships and collaborations may well prove to be the way forward for fellow emerging healthy eating brands because it is unlikely another brand will grow to match Pret A Manger with its 260 London stores. The first Pod unit opened at London Wall in 2005 when the trend for healthy fast food was emerging – it had five competitors in the London Wall area at the time with the number of competitors now grown to 16. “Customers are surrounded by high quality innovation now,” he said. Pod offers healthy breakfast and lunch options while dietary requirements, such as gluten-free or coeliac, are catered for. The last two years has seen health messages coming to the forefront on Pod product labeling – nutrient and vitamin-rich health messages such as the ‘Detox Box’ and ‘Boost Soup’. “Now it’s about bringing the health benefits to the forefront of products,” said Hall. “That communication trend is likely to proliferate in the mass market.” Hall said Pod introduces new innovations that often sell slowly at the start. Its ‘blitzers’ range launched three years ago – where customers can buy a cup of vegetables or fruit to “blitz” at the counter – didn’t sell that well at the start but became a “huge success” last summer as juicing and cold-pressing came to the fore in the media. He noted that the on-the-go healthy eating sector is still in its infancy in terms of scale. But he added: “Customers are now almost ahead of retailers in looking for something new. We are at the beginning of this trend. I can’t imagine a single town in the UK where consumers won’t want to try healthy food or try innovative, interesting recipes.”

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