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Newcastle-based Greggs confident of opening more shops to support food-on-the-go move
A RENOWNED North-East baker says it remains committed to the high street, despite scaling back major store expansion plans.
Greggs has stalled a drive to increase shop numbers as it looks to bolster its position in the £6bn UK snack industry.
The Newcastle-based pie and pasty maker says its existing 70 new store openings are matched by closures, as it moves from its bread making heritage towards new savoury products and fresh sandwiches to dominate the convenience sales market.
The firm has about 1,700 shops, more than burger chain McDonalds, with about 30 outlets in Newcastle, ten in Sunderland, seven in Darlington and six in Middlesbrough, and previously revealed plans to increase its estate to more 2,000 stores.
Bosses, who say they could sacrifice its fresh bread range, have opened a net 22 stores this year, but are focused on refurbishing existing outlets to draw more business from passing sales in the booming food-on-the-go industry.
Roger Whiteside, chief executive, said: “The last seven months have been positive, but we are still cautious because consumers do not have any more money in their pockets and we are fighting for every penny.
“We still believe there is scope for new shops and have ambitions to have 2,000 stores, but we know that people are still managing their budgets and that those conditions will prevail.
“We are reshaping our estate and improving the quality that we can offer, but in the long-term we are still going to be opening shops.”
The firm, founded in the 1930s by John Robson Gregg selling eggs and yeast from his bicycle, yesterday revealed total sales had grown by 3.6 per cent year-on-year in the 13 weeks to September 28, driven by store openings and franchised shop growth.
Mr Whiteside said it had axed its moment coffee shop trial, closing three stores and absorbing the remaining three into the business.
However, he said it was continuing its exclusive agreement with frozen food store Iceland to sell its bake-at-home products, and hopes to build on deals with motorway services firm Moto Hospitality and forecourt operator Euro Garages.
He also revealed it would re-fit about 215 shops this year, with the majority focusing on food-on-the-go to galvanise its push towards that market and beat rivals.
He said: “We are a strong brand with food-on-the-go, and there isn't one that comes close to our scale.
“The bread and cakes side of our business used to make up for than 50 per cent, now its down to six per cent, and we have transferred over time.
“People are buying food to be eaten at their convenience, rather than to be taken home, which the supermarkets offer, and that is where our food-on-the-go we differentiate.
“Our deal with Moto is also proving successful and we have 25 outlets at motorway service stations, with plans to open more next year, and we are hopeful of opening our second shop with Euro Garages soon.”
Gary Fawcett, divisional director at investment management company Brewin Dolphin, based in Newcastle, says Greggs have made the right move.
He said: “Greggs is still a strong force and I think the challenging environment has made them take stock.
“They have still opened a net 22 stores, but have scaled back plans for openings, which is sensible, because those plans were made back when the high street was in better health.
“The food-on-the-go business has seen coffee shops booming, and Greggs have obviously seen that and realised they need to get on that bandwagon and compete with them, rather than just opening more and more stores.
“That is the right thing to do, they can focus on their estate and increase revenue, and where they see an opening in the market they can target that.
“It is short-term caution but the right long-term strategy.”
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