The UK’s biggest bakery chain Greggs exceeded its target of new store openings in 2010 and will speed up the pace of its expansion by a third this year.
A new target of 80 net new shops has been set for 2011, spread around the whole of the UK. This would see 1,487-shop Greggs break through the 1,500-shop marker in the first quarter. In 2010, it broke its target of 60 new shops with a total of 68.
Greggs’ fortunes were boosted by better-than-expected trading in December, as bad weather blighted the UK. Chief executive Ken McMeikan said the firm’s record results for Christmas were a “tremendous performance in difficult circumstances”.
The company’s latest trading update, covering the five weeks ending 8 January, showed total sales up 3.5% and like-for-likes up 0.6%. Highlights were coffee sales, up 26%, and mince pies, up 19%, with eight million sold in total.
“We definitely saw a late surge from customers and also benefited from having Christmas Day on the Saturday,” he said. “You would have been brave in your predictions, given the severity of the snow, not to have worried that it would have a dire impact on Christmas.”
He added that input cost rises on commodities were not yet affecting retail prices: “Ingredients account for about a quarter of our costs and we do expect food inflation will gradually increase. However, we want to protect our customers from food price rises as much as we can, because we have a very strong value reputation. We saw some of this coming, and looked at our forward buying position on different commodities to extend our buying ahead into this year.”
Meanwhile, Greggs is absorbing VAT increases on some of the 20% of products eligible for VAT, including drinks, crisps, chocolate-coated products, hot sandwiches in some shops and outlets with seated outlets.
“We’ve had a look on a product-by-product basis – some we’ve put a small increase through, and others we haven’t,” said McMeikan. “Our customers will have noticed a very small change in the first week of January.”
He also confirmed that Greggs would extend its trial retail formats beyond the capital. “We’ve been delighted with the performance of our concept shops, which are largely around London,” he said. “We will start extending those into suitable refits outside London.”