Greggs’ CEO Roger Whiteside does not expect the bakery chain to return to profit growth for at least two years as the business continues to focus on improving the quality of its offer.
“We will invest £50m in improving and refitting shops this year and going forward an additional £40m to £45m; this will cause an inevitable lag on our returns,” Whiteside said today.
“I would predict that our investment programme will hold things back by about £2m a year over the next few years so profits will remain flat for a while. Our primary focus at the moment is to improve like-for-like sales.”
“We have extended trading hours with all of our stores now open an hour or so later and over 1,000 now open on a Sunday. We are fighting for every penny available”
Plans to hit the 2,000 store mark in the UK – Greggs currently has 1,693 shops nationwide – will be put on hold for the time being as the chain looks to fully establish itself as a “food-on-the-go business”.
The Newcastle-based firm will also look to add seating, of eight to 12 seats on average, in 85% of its shops, and, although shop openings are set to equal closures in 2013, the retailer will focus future openings on travel and leisure locations rather than on the high street.
Whiteside added: “We remain cautious as inflation is still outstripping earnings and the public are spending less as a result, but we do feel we are making the right improvements.
“We have completely overhauled our sweet range, delisted 25% of poor-selling lines – while upping the stocks of the most popular items – and have extended trading hours with all of our stores now open an hour or so later and over 1,000 now open on a Sunday. We are fighting for every penny available.”
Estimating that bakery goods, such as fresh bread, now represent only 6% of its business, Whiteside said that Greggs is now a fully food-on-the-go business driven by ready-made snacks such as sausage rolls and hot drinks.
Greggs posted a 0.5% drop in like-for-like sales for the 13 weeks ending 28 September 2013 while total sales were up 3.6%. However, the last eight weeks have seen like-for-like sales hit 1% growth, according to Whiteside, and he is hoping a strong Christmas period can help things turn around in the second half of the year. Greggs saw like-for-like sales fall 2.9% in the first half of 2013.