Cake Box said it was confident of further progress after the egg-free cake specialist posted an 5.6% increase in group revenue for the 12 months up to 31 March 2023.
Having previously warned its full-year profitably was expected to be “significantly below” market forecasts, the company’s latest results showed a sales total of £34.8m (up from £33m), which it said reflected a resilient business model. It had predicted its revenue would increase by around 5% in its trading update in April.
“The past year has been filled with challenges for Cake Box, but we have successfully navigated through them and emerge better prepared for an exciting new chapter of growth for the business,” stated Cake Box chairman Neil Sachdev MBE. “Despite the difficult trading environment caused by the Ukraine war, inflationary pressures, an exceptionally hot summer and labour shortages, we have shown determination and continued to grow.”
While it remained mindful of the ongoing economic challenges and trading environment, the business noted that inflation was starting to soften in some areas, which will support margin progression over the medium term. Cake Box reported its gross margin had advanced from 48% in 2022 to 49.4% due to ‘enhanced controls’.
A significant investment in its baking facilities at Enfield had lead to improved baking yield, it said, and a nearby 27,000 sq ft bulk storage facility had been rented to maintain continuity of supply and provide greater purchasing power.
Cash from operations was up by a million to £6.3m for the past financial year, with the firm boasting a strong balance sheet of £7.4m at period end.
Cake Box co-founder and CEO Sukh Chamdal said the company had continued to innovate to meet the needs of our customers, worked on improving operational infrastructure despite facing a unique set of macro-economic pressures, and continued to grow sales and margins.
“We are looking at new ways to reach our customers,” he commented, adding that their new website (which launched earlier this month) offered many new marketing opportunities including customised marketing campaigns.
Online sales had experienced a meteoric rise during Covid restrictions, increasing 41% between 2021 and 2022, with Cake Box managing to record further growth of 4.1% over the last year – hitting a total of £13.8m for the most recent year.
Franchisee power
Meanwhile, franchisees were said to remain at the forefront of the business with 20 new shops added over the 12-month period to the Cake Box estate, which now comprises a total of 205 stores. It said it had continued expanding its geographical presence by opening 17 of these outlets in new towns or cities.
“As we approach the 250 target number of stores we set ourselves at our IPO almost five years ago to the day, we continue to look to stretch ourselves with a new target of 400 and new ways to provide the UK consumer with our unique egg-free fresh cream cakes,” said Chamdal.
Cake Box said it had also been empowering its franchisees by enhancing operational standards and investing ‘more money than ever before’ on marketing and brand building initiatives. Working with multiple suppliers for key products had enabled it to control costs effectively despite the inflationary pressures.
Its supermarket kiosk offering had also undergone further expansion, with three new kiosks added to its previous year-end total of 15.
Future focus
Among its five priority objectives for the year ahead outlined in the Chairman’s statement were a data-driven approach and multi-channel expansion, strengthening leadership and governance, and commitment to community and ESG initiatives. The latter highlighted a focus on providing clear nutritional information, reducing waste, and implementing sustainable practices throughout operations.
Chamdal pointed to recent upgrades to improve processes at Cake Box facilities, which gave it “much more scope to explore exciting new recipes and products”, and to expand its gifting and treat product ranges as well as celebration cakes.
He said they were looking forward to promoting their variety of mango products – mango cake, cheesecake, slices, cupcakes, and sundaes – which had been introduced to stores for the 2023 summer season. “Our new cheesecake line, with its capacity to produce products in an array of flavours, is also now fully operational,” added Chamdal.
“The market outlook is improving, our capabilities have been expanded, and the Cake Box brand is stronger than ever. We have the right platform in place for the Group’s development to accelerate over the coming year and beyond.”
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