Its store footprint might be small by conventional fast food or restaurant standards, but with 1,650 sites to its name there are few operators as ubiquitous as Greggs. The nationwide sandwich and bakery chain plans to spend £36m refitting its shops and purchasing new equipment this year as it pursues a strategy of repositioning the business in the food-to-go market. In addition, £10m has been written into the budget for new shops and re-sites, which is more than double the amount it spent on the same area last year.
It is a sizeable outlay, but one that CEO Roger Whiteside believes is necessary to keep the £800m-a-year juggernaut motoring forward. Under his watch, return on capital is carefully managed and measured against predetermined targets, while a cash return on invested capital of 25% over an average investment cycle of seven years for new shops and refurbishments remains the standard benchmark. 85% of Greggs’ new shop locations are away from high streets, such as in retail parks, motorway service stations and travel hubs — a deliberate strategy to drive it into high footfall spots.
“Our shop opening and closure programme is progressively improving the quality and performance of our estate while rebalancing it towards more sustainable long-term locations by increasing our presence in travel, leisure and work-centred catchments,” explains Roger. Greggs opened 30 new shops last year and will seek to double that figure in 2015, while the number of re-fits carried out could hit 220 by the end of 2015. “We continue to believe in the opportunity for increased shop numbers, with our longer-term target being more than 2,000 in the UK, and expect to return to growth in net shop numbers in the second half,” says Roger. There is certainly no danger of the chain getting overly-obsessed with store expansion at the expense of other aspects of the business, however: Roger is also overseeing the diversification of its menu, with the extension of its low calorie ‘Balanced Choice’ range, enhancement of its pizza slice range and introduction of fresh soups helping to ensure customers keep returning for more.
“We continue to believe in the opportunity for increased shop numbers, with our longer-term target being more than 2,000 in the UK”