Successful out-of-home foodservice brands occupy white spaces. They are successful because they meet market demand that is not being met as well elsewhere. This is the part of out-of-home foodservice that goes unreviewed and is met with frequent snobbery from the intelligentsia. Witness Will Self’s attack on JD Wetherspoon, a brand that has been consistently successful because it meets mainstream market demand with an offer that has broad appeal. It occupies a big white space and would-be competitors have been unable to dislodge it. Mitchells & Butlers, Whitbread and countless others whose names are now footnotes in the sector’s history either made tactical withdrawals to focus on white space elsewhere - or disappeared entirely. Mitchells & Butlers decided that its biggest white space was to be found in arterial road eateries. But it still occupies other areas of niche white space such as Irish music and culture pubs, brasserie dining, country destination pubs and premium bars to name a few. Its slight decline in fortunes in the last two years can be linked directly to others, such as Marston’s and Greene King, tilting successfully at its arterial road white space dominance. Nevertheless, a brand like Harvester, with its 30 million meals sold per annum, has stood the test of three decades because it occupies so much white space. Its expansion into retail and particularly leisure parks offers an ancillary shaft of white space to occupy.

Meanwhile, Whitbread decided that coffee shops were a piece of white space in growth - and it will prosper by exploiting the ancillary white space opportunity of coffee-on-the-go.

Great operators can defend white space for a very long time. In other instances, weaker offers find their white space crowded out, their light eclipsed and returns start to dwindle. McDonald’s is the planet’s best example of successful defence of white space over an extended period of time. The company occupies its own patch of canvas in terms of offer, price and convenience. These three components are executed with such precision and appeal for consumers that the company has found success around the world. Others have coveted the space and been successful in co-occupying their own patches around the margins. But none have dislodged McDonald’s primacy. Even in the last ten years, as competition intensified, McDonald’s has defended its position successfully, barring two months of blipping sales. However, the growth of better burger concepts arises from the emergence of white space around the burger margins - consumers will pay a premium for better taste, ingredients, service and environment. The US better burger growth concept Smashburger, whose chief executive David Prokupek presented at our Propel Multi Club Conference this week, was created by McDonald’s own global concept director Tom Ryan, who was clearly better placed than most to spot the emerging white space.

There are areas of mainstream foodservice where market provision is still so unsystemised that expansion amounts to a turkey shoot. Domino’s Pizza has now enjoyed 76 consecutive quarters of sales growth outside of the US. Its US chief executive told Forbes magazine recently: “The joy of pizza is that bread, sauce and cheese works fundamentally everywhere, except maybe China, where dairy wasn’t a big part of their diet until lately. And it’s easy to just change toppings market to market.” Securities analyst Mitch Speiser noted: “Outside the US, there’s a lot less competition in pizza. There’s not much local competition, and there’s not even much competition from other western brands. Domino’s is the first in, in many markets. So, in 70 countries they’re the pizza sales leader, and in 29 others they’re a close second.” In the US, Domino’s space is jostled by two heavyweight competitors, Papa John’s and Pizza Hut. But in the UK, it’s still a very different story with Papa John’s struggling to establish profitability and Pizza Hut relatively weakened. That Yum! Brands insisted on keeping the delivery arm of Pizza Hut UK hints at the foodservice giant’s sense of the untapped potential to co-occupy space here. Meanwhile, for now, Domino’s UK earnings growth reflects its dominance. And there is still lucrative space to inhabit. Take for example the 24-hour-a-day site that has doubled its weekly takings because there is so little branded competition for the cannabis-addled students who find themselves starving hungry at 4am.

Have you found white space and is it defendable?

From the 1990s onwards the received orthodoxy in UK supermarket retail was that ‘bigger’ meant ‘better’. In a ‘race for space’ operators such as Tesco and Asda opened hundreds of square footage per annum - largely edge of town hypermarkets - in which they were able to expand their ranges into non-food categories such as electrical, audio, books, clothing etc. At the time the winners were perceived to be those that sunk capital into new out-of-town sites and/or extended their existing space (through mezzanines and ‘bolt-ons’).

This strategy was fine as long as companies could sweat these large expensive assets, optimising sales through constant range and product extensions. However, the onset of internet trading, commoditising or cannibalising many of these non-food categories has rendered a fair degree of this space redundant. Over the last three years item sales in these hypermarkets have declined by approximately 2% per annum, with (in some cases) only food price inflation and expansion into the convenience sector propping up organisational like-for-like sales comparisons.

The question that many of the operators of these ‘retail cathedrals’ surrounded by a ‘sea of car parking’ face is how they are going to utilise their larger assets more effectively given current consumer trends?

The purchase of the ‘better’ family urban casual dining concept Giraffe by Tesco last week (approximately 50 sites purchased for a consideration of £50m) - alongside their investment in ‘best’ coffee concept Harris + Hoole - gives us some indication as to where the supermarket behemoths are heading in this regard. The ‘eating out’ restaurant and casual dining market in the UK has fared better than retail during the recent downturn (performing at 3-4% annual growth), with consumers still prepared to deploy their discretionary spend on ‘small treat’ occasions.

‘Retailtainment’ malls such as Westfield, Merry Hill, Trafford Centre and Meadowhall have had few problems finding tenants for their ‘food courts’. Consumers seem very keen to combine retail therapy with gastronomic indulgence! Can Tesco achieve the same?

For sure, the provision of better food service offers might better utilise hypermarket ‘dead space’, attracting greater footfall and encouraging longer dwell times. Other offers that will be engineered into this space over time might include upmarket concessions, services (health and beauty), pop-up market traders etc. Such moves would increase the atmospheric dynamic of visiting hitherto functional environments.

However, this dramatic increase in variety in supermarket retailing threatens to disrupt the very factors that led to organisational success in the first place - huge volumes underpinned by lean supply and service systems. Going beyond the simplicity of volume and value, means encountering (and dealing with) the complexity of variety and ensuring quality over a range of unfamiliar products and services.

In the case of Tesco, whilst the investment in ‘emotional’ products and services that will fill space, whilst simultaneously increasing the ‘personality’ of its brand and sites, seems to be a sensible move - its success will rest on whether their business model will cope with greater complexity. History tells us that we should not bet against them!!