Most traditional craft bakers report that their role on the high street has radically altered over the last few years. Where once they focused on loaves of bread, now anything from baked potatoes to cappuccino is on offer in their shops. Many describe themselves as sandwich retailers and talk of having "adapted to survive". At the same time, a swarm of new arrivals, such as coffee shop Starbucks and sandwich chain Subway, have made their presence felt on the high street, selling high-quality bakery ranges. British Baker’s new Top 50 league table of bakery retailers by number of outlets (see pg 16), which will be published annually, puts the changing face of UK bakery retail in context, with old and new bakery businesses listed side by side. The list serves as a reminder that the face of the high street is changing. Subway, Starbucks and Costa Coffee all have 500 or more stores in the UK and other operators, such as Caffè Nero, M&S Café Revive, BB’s Coffee & Muffins, Pret A Manger and Millies Cookies all have estates in triple figures. The list confirms that bakery giant Greggs is king of the new high street, with more than five times as many shops as its nearest bakery rival, Lyndale Foods, the company which owns the Sayers, Hampsons and Maison Blanc brands. With 1,327 UK outlets it also has more shops than the fast-food giants McDonald’s and Burger King (see pg 18), and more shops in the UK than Subway and Starbucks combined. But 2006 was hard on the high street bakery retailer, however large. Many of the businesses who have made it to the top end of the new list have had a very troubled year. The company in 15th place, Welsh bakery chain Ferrari’s, has been trading in administration since late December. Meanwhile, Cooks The Bakery (at number 11) and Birmingham-based Firkins (at number 18) were both bought out of administration during the course of 2006. Even Greggs has recently been through a strategic review and is planning to make products in its Greggs branded shops more "aspirational". Meanwhile, second-ranked Lyndale Foods plans to announce the results of its own strategic review in the Spring, with big changes expected. Casualties A number of well-known businesses have dropped off the list in the course of the last year, most recently 17-shop Coombs Quality Bakers in Leicester, which was absorbed out of administration by Hampshires bakery. Many other bakers on the list speak of a quiet year, with trade picking up between September and Christmas. However, increases in turnover were often offset by rising costs, such as the minimum wage and flour and energy prices. Competition from cafés and supermarkets and changes in eating trends are other common challenges facing firms on the list. Skills shortage is also still a problem, but many bakery retailers speak of the positive impact skilled and non-skilled recruits from the enlarged EU - Poland and Lithuania for example - have made in bridging a growing skills gap the UK. Similarity of approach Many of the bakers in the Top 50 have come up with similar solutions to boosting profitability: they talk of developing their businesses by adding wholesale accounts, offering van sales, modernising stores or introducing new café concepts. Finally, many speak of the importance of having a fine local reputation, to keep drawing customers in. AC Skelton & Sons, for example, plans to develop the wholesale side of its business in 2007. It will start by supplying four Asda supermarkets with Skeltons’ branded products in February. Stepping up the wholesale business will allow it to make use of capacity at its central bakery throughout the day. MD Malcolm Skelton says the company already has a toe in the water, as it supplies Weight Watchers’ products to the supermarkets through Anthony Alan Foods. And it has taken advice on practicalities such as costings and margins from regional development body Yorkshire Forward. On the retail side of the business, Skeltons plans to launch a new café concept in spring to take advantage of booming customer demand for coffee. It plans an initial two or three coffee lounges in its shops, all 42 of which already offer hot takeaway. But Skelton says the list makes him feel nostalgic, as his chain is now the only bakery based in Hull, down from 23 chains in the city in the 1960s. Like many of his bakery comrades on the list, Peter Coughlan, MD of Coughlans, reports that his company is experimenting with mobile shops. The company has two so far. The roll-out of Coughlans’ fresh and modern ’Munch’ store format will complete in March, with 11 of its 20 shops already refurbished. The company also plans to open one or two new outlets in 2007, "taking things very slowly", says Coughlan. Greenhalgh’s, which celebrates its 50th anniversary this year, has one delivery van and has another couple on order for January. David Smart, production director says: "In the north west, you fall over industrial estates, so the vans are a nice part of the business." He adds that the company has seen an influx of Lithuanian staff since the EU was enlarged in 2004 and now has its first Lithuanian supervisor. Smart comments it is surreal to walk round his bakery and see posters up in Lithuanian, which he cannot read. "I will have to take Lithuanian lessons!" he says. He describes 2006 as "not bad" for trade. "We had a rough passage in July, with the warm weather, but things picked up from the end of August." And December was a "scorcher" for sales, he says. Greenhalgh’s opened three shops over the year and Smart believes it would be nice to increase the company’s estate by five more stores to 50 during its 50th year. However, the company found it very difficult to pass on the price increases emanating from the rising costs of energy and flour. It plans to identify new sites, cut costs where possible and be efficient in all areas - especially with energy and flour usage. Firkins’ bakery’s MD Ian Bolderston says he has very ambitious plans for the firm. "We are planning a refurbishment of one store a month, and will also carry out smaller-scale revamps on other stores in the interim to make the brand more appealing to customers. The feedback we’ve had from customers following our first refurbishment in Birmingham city centre in November was fantastic: sales increased by 50% a week." Bolderston, who bought the company out of administration in 2006, says new ranges, such as vegetarian options, have pleased city worker customers. It has also opened a factory shop to target the wholesale market. But there are still major issues in the business: "The industry as a whole is suffering, due to high energy and wheat costs, but these pale into existence compared to growing labour costs. With the government increasing the minimum wage by 5-6%, overheads are constantly rising and, as a result, margins are decreasing, which has a massive impact on any business." Meanwhile, David Jenkinson, MD of Cooplands in Doncaster cites another problem bakers have to tackle. He says the company faces a problem in getting rid of waste - this costs around £64,000 a year. "I used to be able to sell it on, but now we pay people to take it away," he says. "Plastic wraps and cellophane are a problem in bakery waste." James Ainsley, sales and marketing manager of Ainsleys of Leeds says that, in 2006, it faced increased competition in the city of Leeds. "We can overcome this through innovation, new products, different marketing strategies and bolder promotions, such as buy one get one free," he says. But the company plans to continue to expand: "We are hoping to reach 40 stores in the next three years, with three more opened by the end of 2007." Chairman of the National Association of Master Bakers Noel Grout, MD of the 11-shop BB Grout’s chain, says success the traditional baker’s success depends on doing things better than rival operators and maintaining a good local reputation. He says: "Our shops are in an eight-mile radius of the central bakery, in a very tight circle. That allows us high standards for freshness. We deliver to stores two or three times a day. We also make sure our shops are attractive and well-lit; you must not neglect the shops." Like many, Grout talks of changing with the changing needs of society. "Just because a product was successful 30 or 40 years ago doesn’t mean it will be successful now."