Real Good Food is to invest £15.5m in subsidiaries Renshaw and Haydens Bakery.
Renshaw’s is to receive £7m to expand capacity at the Crown Street site in Liverpool by more than 50% and support the launch of a “mainstream retail brand”. Activity will include the installation of new soft icings and discs production lines to support Renshaw’s strategy of broadening its offering to mainstream users.
Haydens in Devizes will receive about £8m to reconfigure site operations as the business has taken to two new major customers, putting pressure on capacity. Investment will also be made in blast freezing capability and the installation of a new, automated yum-yum line. It is expected to take site capacity from its existing level of up to £30m revenue to more than £50m.
Haydens previously announced a multi-million pound investment plan with Real Good Food executive chairman Pieter Totté.
Most of the work at Renshaw and Haydens is expected to be completed by the end of September this year.
“We believe there is a significant opportunity to invest in our operating subsidiaries to drive more efficiencies, customer growth and improve operating margins, which ultimately will accelerate the company’s organic growth,” said Real Good Food executive chairman Pieter Totté.
“We have already embarked upon this within our Cake Decorating division and are seeing positive results in order intake at Renshaw and Rainbow Dust.
The company said it had seen strong growth in revenue across all its operating divisions in the first nine weeks of the new financial period, started 1 April.
In the nine weeks to 4 June, sales were 15% up year on year in the Cake Decoration division, 9% up in Premium Bakery and 87% up in Food Ingredients following the acquisition of snack bar business Brighter Foods (like-for-like sales in Food Ingredients increased 17%).
The £15.5m expansion announced today will be funded by £11.5m from new investor Downing LLP, and two £2m loans from existing shareholders Napier Brown Holdings and Omnicane.