Bakery giant Greggs’ chief executive Roger Whiteside has hailed an “exceptional” year for the company as pre-tax profits soared 41% to £58.3m.
The director who has spearheaded a terrific turnaround in the firm’s fortunes triumphantly said it was “only the start” of a five year plan to take the high street bakers further into the £6bn a year food-on-the-go market.
Announcing results for the year to January 3 2015 Greggs said total sales had now surpassed £800m, up from £762.4m the year before.
Some staff across the chain’s 1,650 stores were set to benefit from a £6.4m profit share pot.
For full-time staff who have been working for the firm more than one year it could spell a windfall of up to £1,000.
Part-timers who qualified for the cash were likely to see anything up to £500 in their March pay packet.
Speaking to The Journal, Mr Whiteside said there would be more innovation around Greggs’ coffee blend, which is now generating £1m revenue each week — accounting for 6% of overall sales.
He said: “Coffee is a really big opportunity for us. We’re providing great value for customers. They’re getting a coffee and food for the price of coffee in other specialist coffee shops.”
Customers showed increasing appetite for the chain’s new low calorie “Balanced Choice” sandwich line and Mr Whiteside promised new fillings were on the way.
He admitted that while the launch of Greggs’ hot dogs had generated positive reviews and initial interest, sales of the quintessential fast food item had since waned.
Mr Whiteside said: “The hot dogs were a big hit when we first launched but the sales have since tailed off.
“We’ve got some rethinking to do there. One of the main factors is them being quite hard to eat. I’ve tried and they require a two-handed approach, which is difficult for people on the street.”
Rising consumer confidence and disposable income, as well as more moderate weather last year, provided the backdrop for a 4.5% rise in like-for-like sales.
Chairman Ian Durant said the food-on-the-go strategy and cost reductions had helped to achieve a set of results beyond the company’s expectations, but promised there was still more work to be done.
Mr Whiteside said: “2014 was a year of significant change and an exceptional step up in performance for Greggs as we began to implement our new strategic plan centred on the growing food-on-the-go market.
“We have improved both our food offer and the shop experience for customers. Market conditions have been more favourable and like-for-like sales have grown throughout the year.
“Overall we are confident of delivering a further year of good growth and progress against our strategic plan in 2015.”
Mr Whiteside admitted that beating last year’s exceptional growth would prove challenging for the company, but pointed towards a re-focus of the shop network to capture more spend.
Throughout 2015 Greggs expects to open between 80 to 100 new shops and close around 60 to 80.
The strategy aims to grow the proportion of non-high street locations to 40%, in line with ambitions to target customers at office and retail park locations.
Mr Whiteside said some shops had experimented with opening hours in line with demand, but said there was no plan to introduce network-wide earlier opening in conjunction with new breakfast product lines to be launched next week.
The man behind the great turnaround of Newcastle's key export
Former punch taverns chief executive Roger Whiteside has performed a remarkable turnaround of Greggs in the last two years.
Since taking the reins at the Newcastle-headquartered bakery firm in January 2013 Mr Whiteside has refocused it to target the £6bn per year food-on-the-go market.
Prior to his appointment the firm had been battered with the headwinds of a severe retail downturn and pressure on consumers’ disposable income.
Flash forward to 2014 and Greggs is now shortlisted for turnaround of the year at the UK PLC Awards. Mr Whiteside’s decision to take on the international coffee giants and supermarket convenience arms has paid off.
The sausage rolls and pasties are still there, but new low calorie sandwiches, soups and even hot dogs have tempted lunch time consumers with their discretionary pounds. Like-for-like sales growth — at 4.5% — was the strongest it has been since 2007.
Exceptional costs of £8.5m — relating to redundancy and the cost of closing the failed ‘Greggs Moment’ coffee shops in 2013 — are set to eat into stellar profits of £58.3m. But the consumer outlook for 2015 is rosier than it has been for some time.
Mr Whiteside does not hide the fact he has been helped by a strengthening economy and more favourable weather conditions, but canny strategy is at the heart of Greggs’ recovery.