1st Mar 2022 15:31
(Alliance News) - J Sainsbury PLC announced another round of cost-cutting measures, with its 200 cafes on the chopping block this time, under plans announced on Tuesday.
It is a move that the grocer hopes will lessen costs, in a bid to compete with German discounters, Hargreaves Lansdown analyst Susannah Streeter commented.
"These are yet more slimline measures Sainsbury's has brought in on a supermarket sweep to cut costs across the business and take on the discounters Lidl and Aldi. It's sliding down the value chain, and investing heavily in reducing prices and this is the latest in a raft of recent restructuring moves by the retailer as it seeks to keep a lid on rising costs," the analyst explained.
Sainsbury's will shut 200 cafes in a shake-up of its in-store dining which is set to hit around 2,000 workers.
The FTSE 100 supermarket chain said it will also be consulting staff about plans to close less popular hot food counters in 34 stores and changes to how it runs bakeries in 54 branches.
The company said: "These colleagues will enter into consultation, with the aim of redeploying those affected to other areas of their store where possible."
Last year, the grocer unveiled plans to cut roughly 1,200 jobs under plans to stop in-store baking. In November 2020, it said the closure of meat and fish counters in some stores would cut around 3,500 jobs.
Streeter added: "The retailer is under pressure to trim workforce costs and logistics, problems which have been compounded by supply chain issues and labour shortages."
The company's in-store dining offering will not be axed, despite the cafe closures. Sainsbury's said it is teaming with Boparan Restaurant Group, which operates brands such as Gourmet Burger Kitchen and Carluccio's.
Expanding on a partnership at the Selly Oak store in Birmingham, England, the duo plan to toll-out an in-store dining offering at 30 more stores this year. A further acceleration is possible further down the line "if the format continues to be popular with customers".
Streeter added: "The in-store dining concept at Sainsbury's hasn't completely fallen out of favour though with the expansion of the partnership with Boparan Restaurant Group which runs Gourmet Burger Kitchen and Ed's Diner outlets. The chain is clearly hoping customers will taste the difference via these tie-ups with known chicken and burger brands, while its own staff costs are taken out of the equation and it can concentrate spend on the business of filling trollies and virtual baskets instead."
Shares in the company were 2.3% lower at 269.30 pence each in London on Tuesday afternoon.
By Eric Cunha; ericcunha@alliancenews.com
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