Updated: Jun 6
The Evening Standard recently ran a headline declaring, “Gail’s is just a posh Greggs”, reflecting local opposition to the bakery brand’s new Walthamstow location.
As someone who appreciates Gail’s both as a consumer and industry insider, I admire how this business has consistently outperformed the market while scaling rapidly and maintaining quality. However, this situation brings up an important question: how much can a restaurant or foodservice brand expand before it risks oversaturation and losing its initial attraction as it grows? This is a challenge we frequently encounter as brand and growth strategists working with clients and our own brands here in the UK and overseas.
With most of its locations concentrated in London and only a few outposts beyond, Gail’s still has significant room to grow within the UK, particularly in Greater London. Comparing it with Pret, which operates 291 stores in London alone – 42% of its global estate – suggests that Gail’s has considerable expansion potential within the M25. This is especially true given its recent growth in travel hubs and an enhanced partnership with Waitrose, which further positions the brand for continued expansion.
This dilemma echoes the recent shake-up at Starbucks, where chief executive Laxman Narasimhan was replaced due to disappointing results. Starbucks is grappling with geopolitics, rising competition and the emergence of fifth wave coffee. Brands like Costa, now backed by Coca-Cola, are poised to take a larger share of the US market. Additionally, non-coffee brands like Joe & The Juice, Panera, Chaiiwala and Gail’s are encroaching on its territory. Meanwhile, Starbucks and Costa have arguably commoditised their own market with innovations in bean-to-cup vending, retail products and ready-to-drink options, which may dilute the perceived value of their high street and stand-alone stores.
During my time in Australia, I experienced first-hand the challenges that foodservice brands face when scaling in a market famously resistant to multi-site brands. Starbucks attempted to introduce American coffee culture in 2000 but closed 61 of its 87 stores within eight years. Though it has since rebounded with around 60 locations, its presence remains modest in a market with more than 20,000 coffee shops. Strong local competition and a lack of market relevance were key factors behind this struggle.
In stark contrast, the local brand Guzman y Gomez has thrived, expanding to more than 200 locations across four countries and becoming one of Australia’s most successful initial public offerings, surging 39% on its trading debut. Guzman y Gomez’s homegrown roots, a focus on a cuisine type ripe for growth and an emphasis on healthy, fresh options have clearly resonated with consumers far more effectively than the typical fried fast-food offerings.
There’s no single formula for success in branded hospitality – if there were, everyone would follow it. Winning in this industry is about continuous testing, learning and adapting. Success is often less about the size of the brand or the number of locations and more about how growth is managed. Several factors can affect the consumer perception that initially made a brand appealing:
- Loss of authenticity:As restaurant groups expand, they risk losing the unique, local or artisanal qualities that first attracted customers. The brand may start to feel too corporate, stripping away the personal touch and distinct character that smaller, independent establishments offer.
- Perceived decline in quality:Rapid scaling can lead to inconsistencies in food quality and service. Maintaining high standards across multiple locations is challenging, which can alienate loyal customers.
- Over-saturation:When a brand becomes too ubiquitous, it risks losing its special appeal. Consumers may prefer unique, independent options over a brand they see everywhere.
- Lack of local connection: Large brands often struggle to maintain a strong connection with local communities. Consumers value the local flavour and community ties that independent restaurants provide, which can be diluted in a larger corporate structure.
- Brand fatigue: As brands expand, the novelty of their concept can wear off, leading to brand fatigue. Consumers might seek out new and exciting dining experiences, moving away from a brand that feels too familiar or predictable.
Successfully scaling a multi-site group ultimately hinges on the everyday decisions that shape strategy, operations and the organisation. Here are my distilled insights:
- Experience design: Create a seamless customer journey that prioritises memorable moments and showcases personality.
- Balancing structure and entrepreneurialism:Implement robust processes for consistency while allowing for entrepreneurial flexibility.
- Strong culture:Develop a clear company culture that aligns structure with core values, emphasising people and individuality.
- Quality focus:Maintain high standards for food and service through comprehensive training and quality control.
- Cultivate brand identity:Build a compelling brand identity that resonates with customers and reflects your values.
- Invest in learning and development:Focus on employee training to foster a motivated workforce, as happy employees lead to happy customers.
- Embrace customer feedback: Gather and utilise customer feedback to drive improvements and brand evolution.
- Stay current with trends:Keep abreast of industry trends and changing consumer preferences to maintain relevance and appeal.