Greggs has reported that its manufacturing and logistics shake-up, which has brought the closure and restructure of a number of sites, is boosting efficiency and product quality.
In a trading update published today (1 August), the business said commissioning of yum-yums production at its Glasgow factory had gone well and was “already delivering improved product quality, consistency and efficiency”.
Greggs closed its bakery in Edinburgh in May, and transferred production and logistics activity to Glasgow as part of a company-wide strategy to create ‘centres of excellence’ focused on distribution and/or production of a specific type of product.
The next phase of investment will be consolidation of cake and muffin production at its Leeds site.
Greggs has also rolled out a new central forecasting and replenishment system to all its shops, and said this had improved product availability while simplifying administration for shop staff.
“Inevitably there has been some increase in costs in the transition, but there is a clear net benefit already and we will build on this as we learn to harness the benefits of this new technology,” said Greggs CEO Roger Whiteside, describing the system as “the most significant process change that the business has ever embarked upon”.
Greggs reported a 7.3% year-on-year increase in sales to £453m in the first half of its financial year, with like-for-like sales in company-managed shops up 3.4%. The company stated that, despite pressure from cost inflation, operating profit rose 1.8% to £27.6m
Demand for breakfast and coffee remained strong and the popularity of its hot sandwiches continued to increase.
The company said it expected to open 100 new sites across the financial year, having opened 61 in the first half – 24 of which were franchised sites – and closed 19. As of 1 July, it had 1,806 sites trading.
Greggs’ first drive-through store, opened in Manchester in June, had been popular and suggested there could be demand for further drive-through sites, reported the company.
“We also continued to expand the estate in the south-west of England and in Northern Ireland while adapting our formats to suit locations such as garage forecourts,” reported the business.
Whiteside added he was confident the strategic investments being made would enable the business to continue delivering further profitable growth.
“In the short term we remain alert to pressures building on consumers’ disposable income and the continuing economic uncertainty,” he said. “Over the year as a whole, we expect to deliver results in line with our previous expectations as well as further progress against our strategic plan.”