Greggs eyes rapid expansion despite 'uncertainty' over coronavirusby
After posting record profits due to its vegan range, the bakery chain Greggs is bidding to gain a bigger slice of the coffee shop market while also expanding away from the High Street.
Investment in its Veganuary initiative in 2019, including the launch of the vegan sausage roll, contributed to a 31% rise in pre-tax profits to £108.3m. Sales increased 13.5% to £1.17bn.
“We had an exceptionally strong January in 2019 on the back of the vegan sausage roll publicity,” chief executive Roger Whiteside said in a response to a question from AccountingWEB on a media conference call.
“We didn’t know what to expect in the second Veganuary in which we launched the vegan steak bake – and it’s been another very strong start. Our January sales were 10% up on the previous January,” he added, saying Greggs was addressing the trend of “people eating less meat in their diet but not converting to a fully vegan regime”.
Promising “more vegan choices in the months and years ahead”, Whiteside revealed a slowdown in sales in February due the impact of the storms that battered Britain, as the company prepares for potential financial repercussions from the coronavirus.
The CEO admitted to “uncertainty” about the implications of the coronavirus on the company’s ambitious growth plans, although there was “nothing in our food supply chain that causes us any concerns”.
“Our concerns around the coronavirus are those things that are out of our control on the demand side, so what might happen if it becomes widespread in the UK and people don’t travel as much and go to work as much,” he said.
“We have no idea what to expect and we will have to react accordingly. We are in unchartered territory.”
Whether or not the outbreak of the coronavirus hurts Greggs’ aggressive expansion plans remains to be seen.
After six years’ of “unbroken growth”, the Newcastle-based company is planning and financing a transformation from food on the go to what Whiteside billed ‘next generation Greggs’, centred on introducing a range of multichannel options.
While he said Greggs would continue to add 100 new shops every year to the existing 2,050 – aiming for bigger food-led coffee shops in high street locations – “we know that if we open multichannel, we can offer customers better access to Greggs, so they have it at different times of day, whenever and however they want it. Digital channels will enable us to do that”.
Whiteside suggested that the bakery chain’s burgeoning brand reputation had altered perceptions about the company, which was now planning and financing a “healthy pipeline” of shops to open in more airports, railway stations and petrol forecourts. He also spoke about the possibilities to bring Greggs to business and retail parks and industrial estates, while also increasing the number of drive-thru outlets.
Whiteside shrugged off any concerns around the impact of Brexit on the business, which employs 25,000 people, saying there had been no change in the government’s position prior to the general election.
But he cautioned: “When it comes to the negotiation [with the EU] we don’t want the government to do anything that might damage the economy. They have to try and negotiate the best deal they can for the country.
“We will take precautions in the event that there is some disruption in the short-term at borders and things like that… we will dust off the plans that we had ready for a hard Brexit last time should there be a hard Brexit this time.”
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Mark Bisson is a sports business reporter and editor with over 20 years experience. He currently writes about Premier League and Championship clubs for football finance website, Off The Pitch.
An Olympic correspondent for more than 13 years, he has written for many UK and international sports business publications.
Mark is a former...