WH Smith, historically recognized for its association with books, newspapers, and stationery, is evolving its business model. This month, the retailer announced plans to launch cafés under the new Smith’s Kitchen brand, boosting its share price as it ventures into this promising direction.

While the company has faced challenges in the past, such as the closure of its DIY chain and television channel, this shift signifies a renewed entrepreneurial spirit. However, entering the café sector comes with its own risks.

Traditionally seen primarily as a newsagent, WH Smith now positions itself as a global travel retailer. Over the last decade, the company has expanded its food offerings, serving around 11 million meal deals annually to travelers at airports, hospitals, and various transit locations, indicating a significant shift in customer preferences.

The upcoming cafés will feature a variety of items, including coffee, freshly baked pastries, and breakfast dishes, alongside products from the recently launched Smith’s Family Kitchen range. Initially, the focus will be on catering to hospitals, which have become an increasingly popular sector for food services.

Group Chief Executive Carl Cowling, who began his journey at WH Smith in the travel division, is supported by Andrew Harrison, the current head of airport and hospital shops. With experience managing major airports, Harrison brings valuable insights into the food service industry.

Recognizing the decline in physical newspaper sales and the shift to digital platforms for books, WH Smith is moving away from its traditional retail model and is not opening new high street locations. Instead, they are revamping existing shops, introducing popular in-store concessions such as Toys ‘R’ Us.

In a recent announcement, Cowling highlighted the transformation of WH Smith’s UK travel business into a comprehensive provider of travel essentials, which has begun to show promising results with increased transaction values.

The increase in travel has helped mitigate the slumping sales from traditional high street stores. In the quarter ending June 1, travel revenue grew by 8 percent year-over-year, helping overall sales rise by 5 percent despite a 4 percent decline in earnings from high street operations.

Although sales in North America were only up by 3 percent, the rest of the world saw a 15 percent increase, underscoring WH Smith’s global reach, especially through its InMotion brand, the largest travel technology retailer.

Market watchers are eager to see how this new café initiative unfolds. If successful in the UK, there may be plans for expansion into international markets with adaptations for local preferences.

The company will provide updates on its performance in its upcoming trading statement scheduled for September 11, giving further insight into the impact of its foray into the catering business.

Last year, shares were recommended at £15.20, driven by hopes for North American growth. Although they peaked at £16.44, the stock dropped to £12.17 as plans for the American market did not materialize as anticipated.

Forecasts from Peel Hunt analysts suggest earnings per share could grow significantly in the coming years, with a projected drop in the price-to-earnings ratio, highlighting the value in comparison to competitors in the food retail sector.

As WH Smith navigates this transformation, it aims to balance its traditional operations with innovative offerings in the growing café market.