Greggs powerhouse

30 January, 2009
Can the man at the helm of Britain's leading bakery retailer give it the 'Tesco effect', with consumer-focused policy and ambitious expansion plans? Anne Bruce finds out more
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Tesco opened its first Tesco Express outlet in October 2002 and now has 880. Not bad for six years' work.
The relevance to Greggs? Well, Greggs has a new man in charge, Ken McMeikan. He spent 14 years at Tesco and was a key figure in the glory days of the roll-out of its Tesco Express format in 2004, leaving afterwards for Sainsbury's. That's why McMeikan should be taken seriously when he promises an "escalation in growth" at Greggs, already the UK's biggest takeaway chain with 1,403 shops - many more than McDonald's or Starbucks. "We are a growth business and we need to set up in a way that we can accelerate this growth," McMeikan insists.McMeikan is in the ideal position to do that; his prudent predecessors squirrelled millions away in company coffers and the business has zero debt.Growth opportunitySo what is the scale of his ambition? The old Greggs would reliably open around 50 new shops a year, towards a longer-term goal of 1,700 by 2010.McMeikan takes a bolder approach. He comments: "I have seen a significant opportunity for growth in the UK. We serve one million customers a day, there are over 60m people in the UK. There are parts of the country that do not have a Greggs or a Bakers' Oven shop and towns and cities where we are under-represented. Customers love our products, but we need more locations."Adding shop numbers is not difficult, he says. In fact, the economic downturn will make it easy. "I believe there is going to be an over-supply of bakery units available on the high street in the future and that the rentals market will soften. I don't want to set artificial targets," he says, explaining that location is what matters. "People can be driven to acquire shops for numbers' sake. We want the right shops in the right locations - not shops that cannibalise existing trade. And we want the best deals on leases; we don't want to lock into 10-year deals with five-year break clauses."Greggs is also planning to look at the Irish market for the first time as it expands, although there is "no immediate rush", he reveals. "There is significant growth opportunity in England, Scotland and Wales, but at some point in the year, we will go to meet with people on the ground in Ireland and understand the property market and which parts of the country are appropriate."For now, it's all about sorting out "operational challenges". Even a business like Greggs has room for improvement.Competition As British Baker's 2009 Top 50 list shows, Greggs' top spot on the list is under threat, as the 1,284-shop chain Subway plans to overtake it on store numbers by the middle of this year.Moreover, Greggs' business structure, with 10 separate divisions, causes complications. At the moment, only 30% of Greggs' range is the same nationwide, McMeikan wants that to be 80%, with 20% of the range still being regional. "We want to simplify it and make it consistent," he says.Greggs is also converting Bakers' Oven shops to the dominant Greggs brand and closing its 10 loss-making shops in Belgium, to focus on leadership in the UK.In addition, it will look at the way it serves customers, McMeikan adds. "Our loyal customers know we make sand- wiches fresh every day, and know if the product is not there, they can ask one of our staff to make it. We need to get that message across to everyone."The tea and coffee offer is also being investigated. "We will offer great-tasting coffee, but cheaper than the competition - not £2, say £1.20," he says. "I am able to bring a lot from my background in supermarkets and convenience stores. I understand how a world-class centralised business like Tesco operates, listens and reacts to customers in a way that is consistent across the whole estate," he says.Sounds like McMeikan plans to keep Greggs top of the bakery retail tree for some time to come.



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