Last year was a tough year for high street retailers, with the shock demise of iconic high street brand Woolworths perhaps best capturing the turmoil facing traders. Bakery retailers were just recovering from runaway commodity, ingredients and utilities prices at the start of the year, when the economy went berserk as the newly-coined "credit crunch" started to play out in the UK. Property prices plunged, consumer spending predictions were thrown into the unknown and availability of institutional funding dried up.
Surprisingly then, the vast majority of the retailers on British Baker’s Top 50 2008 list are still doing good business, as the 2009 list publishes. While some names are missing, there have been few dramatic changes to the status quo - at least not yet.
Greggs is number one for the third year running, with 1,403 shops, and Subway is rapidly catching up at number two, with 1,284 in the latest list. Once again, Subway is the fastest grower on the chart, adding 264 outlets to its estate in 2008. Its current rate of growth would see it overtake Greggs in 2009. In fact, Subway development agent James Fleck goes so far as pledging it will have overtaken Greggs by the middle of the year.
Scratch the surface and it becomes clear a scrap is brewing to hold on to the mantle of Britain’s biggest bakery retailer. Greggs’ new chief executive Ken McMeikan tells British Baker that Greggs is preparing for a growth spurt of its own, after centralising and streamlining its operations.
Although McMeikan won’t commit to numbers, he insists that the changing face of the high street could benefit Greggs. "I believe there is going to be over-supply of bakery units available on the high street in the future and that the rentals market will soften," he predicts. "People can be driven to acquire shops for numbers’ sake, so I am not setting any targets."
== Standing firm ==
The Top 50 includes all types of retailer of bakery products, modern and traditional, from craft bakers to café chains. And the 2009 list features many strong regional craft bakery businesses, with Birds of Derby, Greenhalgh’s and Thomas of York among those standing firm in the face of a recession.
Mike Holling, retail operations manager of Birds of Derby, and chairman of the National Association of Master Bakers says Birds has been staying focused, investing by upgrading the machinery at its bakery and continuing to refit stores in a rolling programme.
However, the risk of fewer big-name retai-lers drawing people to the high street could have an adverse effect. "We are continuing to work through the most challenging times in the industry that I have ever experienced," says Holling. "I am under no illusion that things will change soon. But the big question is, what will the high street look like in 2009? With Woolworths closing and fashion houses going into administration, we as bakers need supporting businesses on the high street."
Like Birds, Bolton-based Greenhalgh’s is pressing ahead, despite these uncertainties. It had 54 outlets at the end of 2008, and was continuing to roll out its new fascia across the estate following its recent re-brand, production director David Smart tells British Baker. "These are challenging times; nothing is recession-proof," he says.
"Careful management is the key to prosperous survival and you have to keep your eye on the ball. We’re still meeting our targets and putting on shops. You have to be prudent but keep to your goals."
== Expansion plans ==
Like Greggs and Subway, many smaller businesses on the list are pushing ahead with expansion plans in 2009 despite the economic slowdown.
At the start of December, Leigh bakers Waterfields bought out of administration the 87-year-old John Pimblett & Sons bakery business, which had 10 shops in Liverpool.
The deal took Waterfields’ estate to 49 shops and up to 22 on the 2009 list. Waterfields is realistic about the challenge the acquisition will present and admits it will "take time to bring the new shops in line with the rest of Waterfields".
The Patisserie Holdings business, at 18 on the list this year, also continues to expand, adding both Druckers and Patisserie Valerie fascia sites to the estate. The company plans to add 15 to 20 new sites in 2009.
"Current trading is OK but we believe trading in 2009 will be very hard," managing director Paul May tells British Baker.
And Scotland’s Aulds, which currently has 41 outlets, plans to open a number more in 2009, it says.
David Jenkinson, managing director of Cooplands in Doncaster, at 16 on the list with 75 shops, says the company will open eight to 10 new shops in 2009, following a £400,000 investment in production equipment in 2008.
Jenkinson is optimistic but cautious about the year ahead. "We are not feeling the credit crunch too badly; demand is pretty stable, but it will be a time for caution in 2009. We expect it will be a bit rough, but you have got to continue pushing," he says.
Nantwich-based Chatwins is also steeling itself to face 2009. It currently has 19 shops and joint managing director Trevor Mooney reports that, although trade was going OK in the run-up to Christmas, the true test would be how it holds up in early 2009. "What it will be like in the New Year will be the telling point," he says.
The only new business on the 2009 list is upmarket London chain Apostrophe, which ranks joint 50th with 16 outlets. Managing director Amir Chen, a former banker, says the company is self-funded and plans to open around three to five outlets a year, sticking to the London area. His mission is to "bring glamour" to the cosmopolitan London market. He comments: "Why make customers feel they are in the south of France - why not make the most of this cosmopolitan city we are in?"
While many businesses on the list are in a positive frame of mind, among the most notable on the 2009 list is Cooks the Bakery, formed from what was once the 250-branch 100-year-old Three Cooks business, then owned by RHM.
Following a few troubled years, Cooks the Bakery now only has 80 shops left, having closed another 18 outlets in 2008.
A source at the company, now 14 in the Top 50, is downbeat about the state of play on the high street: "It’s grim. Retail is hard, the economy is hard. If shops are cheap in 2009 we may buy a few, but if not we may have to look at what we have got."
== List of casualties ==
For some, the pressures of the high street, and runaway commodity and utility prices, proved too much in 2008. Establishment name Lyndale Group was the biggest casualty of the year when it collapsed last June. It owned businesses including Sayers and Hampsons and had 201 shops when the last Top 50 was compiled.
Hours after the administrators were called in a management buy-out formed a new company, Sayers the Bakers. This included 158 Hampsons and Sayers stores, as well as the Hampsons bakery in Bolton.
Meanwhile, Lyndale’s swanky 15-shop London chain Maison Blanc had already been sold to Kuwait-based Kout Food Group Company in October 2007.
Administrator Dermot Power, from BDO Stoy Hayward, blamed increases in the cost of wheat and utility bills. "One of the reasons the company failed was because of high energy costs - including gas and electricity - and dramatic increases in the cost of wheat," he said.
The 140-year-old 54-shop Black Country chain Firkin, 18 in the 2008 list, has also been in trouble in 2008, falling into administration in November. It blamed rising supplier prices and credit problems following the economic downturn. Emerging from that was the new Firkins Foods, at 26 in the list, which was created by managing director Ian Bolderston to buy its bakery at West Bromwich and 38 of the shops out of administration.
Another big name, Ferrari’s Bakery (19 in the 2008 list) is notable by its absence. The troubled South Wales chain was liquidated on 25 November, with its 24 remaining shops closed down. The closure marked the end of a chequered period for what had once been Wales’ biggest bakery chain, with 60 shops.
With credit in short supply and with customers watching the pennies, the Top 50 retailers are saddled up for a rough ride in 2009. Many agree that the demise of high street stalwart Woolworths will impact on everyone in 2009.
"If Tesco buys those sites we are done for," says one retailer. "There will be less to draw people to the high street in 2009," comments another.
It is anyone’s guess what the year will hold. But many joke that credit-crunched customers are likely to turn to comfort eating of pies and cakes. So the baking industry should be resilient to economic distress.
NB: Travel concessions business SSP, which was sold off by catering giant Compass in April 2006, has revised its figures since the last list was compiled and now registers 526 outlets, 35 fewer than last year, under fascias including Millie’s Cookies and Upper Crust.
It explains that these figures relate to the SSP-operated units in the UK and include the Compass and Moto franchises.