The year 2007 will be remembered as one of extraordinary change on the high street, as ’deskilled’ bakery formats such as Subway and Costa Coffee stormed the UK, trading in the same territory as the modern baker’s shop.
Subway opened 240 franchises over the year and finished up with over 1,000 outlets in England, Wales, Scotland and Northern Ireland. Costa Coffee was not too far behind, overtaking rival Starbucks. It now has nearly 700 cafés serving premium cakes, biscuits and sandwiches.
But over 2007, the UK’s largest bakery chain Greggs was undaunted by difficult economic conditions, from floods to commodity price hikes, racking up its estate to nearly 1,400 outlets across the UK, more than any of its ever-more diverse rivals and even fast food giant McDonald’s, which actually saw a decline in its number of outlets.
In a climate of rising costs and changing consumer demands, Greggs has not been standing still, trialling new products and formats over the year as well as earlier and later trading hours.
Many of the other bakery businesses on the list achieved new heights as they also unveiled modernised and experimental formats, ranges and initatives such as van sales operations - or even bought rival names on last year’s list.
For example, in June, Cooplands of Scarborough acquired AC Skelton & Sons, number 24 on the 2007 list, out of administration. The enlarged chain now has 75 shops and eight cafés. Chris Wainwright, bakery manager, comments: "It has been a very exciting year, having taken over a company that had half as many bakery shops as we originally had. We look forward to 2008, but like everyone else in the industry, we predict that it will be another challenging year. Our main aim will be to keep customer spend up. We are also looking to develop the business further and are currently looking at new retail sites."
It is a brave new world for the baker, with the likes of innovative Lancashire craft bakery chain Waterfields (number 27 on the list and Baker of the Year, sponsored by Vandmoortele, at the 2007 Baking Industry Awards) showing the way.
Waterfields was also winner of the 2007 Rank-Hovis-sponsored Craft Baker Award, and its many new ideas include a new Select format store, selling eat-on-the-go lines. Waterfields says that in times of enormous change, one thing has remained constant - its pledge to provide customers with products that exceed their expectations in both quality and value.
The latest list also highlights decline in some of the long-established businesses towards the top, which are still finding their identity as the market changes. Lyndale Foods, the company which operates the Sayers, Hampsons and Maison Blanc brands, is currently going through a strategic review. It closed 44 of its less lucrative shops over the year, leaving it with 201 outlets. Cooks (The Bakery), which has seen troubled times of late, also saw the wisdom of closing down sites that failed to deliver to its criteria, selling off some 23 outlets over the year.
The early part of the year also saw casualties on the list. Last year’s number 20, sandwich chain Benjys, called in the administrators in February, with its 47-shop estate sold off piecemeal. And, as mentioned, AC Skelton went into administration in March, blaming supermarket competition and rising energy costs.
Wales’ Ferraris Bakery (number 19 this year) also spent a period in administration, although it was bought out by a corporate recovery firm, Best Bakeries/Ferrari’s Fresh Bakeries, in February.
Meanwhile, suitors including Lion Capital and London-based investment fund Bridgepoint Capital chased Pret A Manger during the year. The business, which is one-third owned by McDonald’s, revealed plans to explore its strategic options or float on the stock exchange in April. But by December, fears of a recession in America led to rumours that Pret might be left on the shelf after all.
Perhaps the most interesting deal in the course of 2007 was the formation of Patisserie Holdings, by entrepreneur Luke Johnson - through the acquistion of last year’s number 26, the upmarket Druckers chain through his vehicle Risk Capital Partners.
Johnson, the man accredited with turning Pizza Express into a major European brand, had already bought London’s Patisserie Valerie chain of 10 patisseries last year and revealed he planned to merge the businesses, while retaining the two separate brands. He claimed he had formed the UK’s largest patisserie chain, creating a high-quality "market leader in this fast-expanding sector".
The desire for excellence in standards of quality and customer service is what unites the success stories in this year’s Top 50 ranking - from the highly skilled artisan to the entrepreneurial franchisee. n