Greggs profits rise 10% as food-to-go sales rise

Greggs reported a 10% rise in profits in its full-year trading update

High street baker Greggs reported a 10% rise in profits to £80.3M in its full-year financial update, driven by consumers’ growing demand for food-on-the-go, alongside plans to restructure its manufacturing operations.

Greggs’s total sales rose 7% to £894M, while company-managed shop like-for-like sales were up 4.2% to £777M, according to the results posted today (February 28).

The baker also planned to centralise its manufacturing to improve quality and efficiency, it said. Greggs warned the decision might impact jobs. See the box below for more information.

Greggs chief executive Roger Whiteside said: “In 2016 we delivered another strong performance as we continued on our journey to transform Greggs from a traditional bakery business into a modern, attractive food-on-the-go retailer.

‘Changing needs of our customers’

“Our product offer is evolving to meet the changing needs of our customers and our shop estate and service levels have benefited from significant investment.”

The breakfast range was the fastest growing sector in Greggs, it reported, linked to customers’ commutes. The low-priced breakfast offering and greater menu choice meant sales continued to rise last year, it said.

Greggs opened stores earlier in the morning to cater for customers’ breakfast demand, which helped boost sales over the year. Stores also remained open on Sundays to increase turnover, it said.

Greggs results – at a glance
  • Profits rise 10% to £80.3M
  • Total sales rise 7% to £894M
  • Demand for food-to-go and longer opening hours boosted sales

Demand for Greggs’s Balanced Choice range continued to grow last year, too. The range, featuring products with fewer than 400 calories, topped £100M last year, driven by its fresh salad launch in the summer, and increased selection of fruit, yogurts and the baker’s first gluten-free products.

Invest in new systems

This year, the baker will invest in new systems and process improvement, it said. It would also continue to grow its Greggs Rewards scheme – the mobile customer loyalty scheme.

Whiteside said: “The UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand.”

Greggs also rolled out its delivery service – Greggs Delivered – offering last year. But, the company revealed it did not see home delivery as a viable opportunity. It would instead offer a collection service.

 

Greggs to restructure manufacturing
  • Manufacturing operations to become centralised in a two-year process, to improve quality and efficiency
  • “Strategic decisions of this magnitude impacting jobs are always difficult and I am grateful for the contribution and professionalism of our teams who have been making these changes whilst maintaining service standards to our shops.”

Greggs statement

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