UK: Bakery chain Greggs slows shop expansion to focus on ‘food on the go’
- Credit: PA
Bakery chain Greggs is to slow shop expansion plans and focus on “food on the go” customers under a turnaround to shore up sales after the recent summer heatwave left it nursing a £2million hit to profits.
The Newcastle-based company, which has nearly 1,700 shops, warned over profits for the second time this year as it said the hot summer weather saw like-for-like sales slump 3.2% in the five weeks to August 3.
Its recent sales slump, combined with demand for less profitable cold drinks in the heat, impacted its bottom line by a further £2m, with full-year profits now expected to be around £3m lower than previously expected, warned Greggs.
Chief executive Roger Whiteside - the former boss of Punch Taverns, who took on the top job in February - unveiled an overhaul that will see the group shift away from traditional bakery towards the “food on the go” market over the next two to three years.
It will put the brakes on new shop openings and close around 40 shops this year as it looks to give the existing chain a makeover, with aims to refurbish another 130 to 150 shops by the end of the year, adding customer seating and serving coffee where possible
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The group has also extended its opening hours, bringing in teams to make fresh sandwiches earlier and staying open later to cater to the growing trend for afternoon snacking.
But Greggs will scrap its separate Greggs Moment coffee shop trial, costing it £6m to £8m in write-offs and said it will not expand its wholesale “bake at home” initiative beyond current customer Iceland.
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The decision means Greggs has also axed plans to build a second factory at Hinckley in the East Midlands in a blow to hopes for more jobs in the region.
Shares fell 7% after the profits alert and as half-year figures showed a 29% plunge in pre-tax profits to £11.4m in the six months to June 29.