Convenience specialist McColl’s is piloting a partnership with fast-food giant Subway in a bid to create a “more sophisticated” food-to-go offer.
- McColl’s pens deal with Subway as it steps up food-to-go drive
- Boss James Lancaster says it is “the first of what I hope will be many”
- Follows “bloody marvellous” performance of McColl’s food and wine stores
- Lancaster “hungry as ever” to acquire more stores as expansion continues
McColl’s will open a Subway shop at its petrol forecourt in Tamworth after penning a deal with the sandwich chain yesterday.
The retail group’s boss James Lancaster spoke to Retail Week about the deal after unveiling McColl’s interim results, which saw adjusted EBITDA rise 1.9% to £16.2m despite a 1.9% fall in like-for-likes during the 26 weeks to May 31.
“It’s a complementary offer to what we have in store. Food-to-go is the right way for the future.”
James Lancaster, McColl’s
Lancaster said he was “very enthusiastic” about the Subway tie-up, which comes two years after fellow grocer Lidl partnered with Subway to share space within its store in Cromer.
Lancaster revealed the fast-food outlets could be rolled out to its convenience stores across the country if the Tamworth trial, which will be run by McColl’s employees, proves successful. But he dismissed suggestions that the Subway shop could dent sales of McColl’s existing food-to-go range, insisting it would provide a “complementary offer” for its customers.
First of many
Lancaster said: “It’s the first of what I hope will be many. If the trial works out, it’s something we’d like to do a lot of business through.
“It’s a complementary offer to what we have in store. Food-to-go is the right way for the future.
“For us it’s all about taking new products and services to an existing marketplace. The existing marketplace is newsagents – you add food, alcohol and longer hours as the main strategy to convert them into convenience stores. As you move on, you’ve got to become more sophisticated with your food-to-go.
“I’m very enthusiastic about it because it looks like the demographics of a Subway diner fit our customer demographic.”
Lancaster added that McColl’s performance had been “bloody marvellous” after like-for-like sales at its food and wine and premium convenience stores held flat “in a challenging period,” while comparative sales at newsagents and standard convenience stores dropped 4.7%.
Lancaster said that reaffirmed the retail group’s strategy of converting its newsagents into convenience stores, which are “in a more sustainable position.”
In addition to up to 50 conversions planned this year, Lancaster said he is “as hungry as ever” to acquire stores and is eyeing 60 stores per year to continue the “boom” it has had since floating last February.
He added that McColl’s would specifically target “smaller groups” of between three and 10 stores, which are “very attractive” to the group as it presses ahead with its expansion plans.