Fashion and food retailer Woolworths is planning to transform some of its in-store cafes into full-service restaurants offering dinner, aiming to expand its food services business.
In July last year, it began offering dinner at its Woolies Cafe in Waterstone, Cape Town, which also features a wine and cocktail bar.
The company intends to open similar establishments in key locations, Business Day reported.
CEO Roy Bagattini mentioned that the concept restaurant has seen 30% growth since its launch, highlighting the demand for Woolworths’ food services.
“We are testing the concept and have more in the pipeline,” he said.
Bagattini explained that Woolworths is building a substantial food services business, leveraging its well-known and popular food brand.
This division includes the group’s food stores, fast food outlets called WNowNow, WCafes that serve breakfast and lunch, and coffee carts.
Bagattini noted that food services represent a “massive opportunity for us.” The group operates around 100 cafes and 350 food stores.
“The opportunity to extend our food stores with cafes is massive, but also the opportunity of putting some standalone cafes into place.”
Woolworths’ food segment continues to perform exceptionally well, with turnover increasing by 11% to R47bn for the year ending in June. Profit before tax rose by 15.7% to R3.1 billion.
'We expect Woolworths’ differentiated premium food business to continue to be the star performer' - CEO Roy Bagattini
The emphasis on cafes and other food businesses is part of Woolworths’ growth strategy for its new ventures under the Woolworths Ventures unit.
Other businesses in this unit include the liquor outlet WCellar, pet store Absolute Pets, and WEdit, which are smaller clothing store formats.
Regarding the liquor business, Bagattini noted that while Woolworths’ customers spend a significant amount on food at their stores, they tend to purchase alcohol elsewhere.
Alcohol accounts for about 2% of sales, whereas peers achieve over 10%.
“You can see there is a significant upside opportunity for us there, but we want to do it in the Woolies way so it’s important for us to provide a unique and different customer experience as well as the right product. We are the third-largest brand of wine in the country and many people don’t know that. We sell about 1.5Ml of bubbly wine every year.”
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