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Greggs, the UK bakery chain renowned for its sausage rolls, plans to open 100 new shops this year even as the pandemic leaves the group facing its first annual loss since listing in 1984.
Despite a bruising 2020 defined by the coronavirus crisis, chief executive Roger Whiteside said on Wednesday that the chain continued to identify “good opportunities” for new shops with lower rents, and that sales at stores accessed by car had been roughly 10 per cent higher than the rest of the estate.
Defying gloomy forecasts of permanent damage to city centres, which have seen sharp drop offs in footfall during the crisis, Mr Whiteside added that Greggs wanted to open “as many [shops] as possible” in central London and had opened two sites in St Pancras station at the end of 2020.
“Even if [travel hubs] come back at half the level they were before, they are still the busiest places for food-to-go on earth,” he said.
The expansion plans come as the Newcastle-based group said that total sales in the three months to the end of January 2, a period interrupted by a lockdown in England, had fallen 14 per cent to £293m. Total sales for the 12 months to January 2 dropped more than 30 per cent to £811m from 2019.
As a result, Greggs said it expected to report a pre-tax loss of up to £15m for its financial year — versus an analyst forecast of a £63m loss — and did not expect sales to return to pre-pandemic levels until 2022 at the earliest.
“The significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance,” the company said in a statement.
In an effort to access customers at home during lockdowns, Greggs has sped up plans to expand its delivery operations and its partnership with the supermarket Iceland, which sells Greggs’s products for baking at home. The chain started offering a version of its much vaunted vegan sausage roll in Iceland this month.
Analysts at Barclays said that as a result of its efforts, “Greggs is arguably a better business post-Covid, with delivery growing, and the ability to sign new leases on more attractive sites, given covenant strength.”
Shares were up roughly 9 per cent in midday London trading.
Mr Whiteside, who has led the company since 2013, said that Greggs was working to expand its hot food menu in the coming months as it seeks to target delivery customers in the evening when its shops are closed.
The chain’s share of sales via delivery had increased from 2.6 per cent of the total in the September quarter to 5.5 per cent in the final quarter of 2020. It has plans to expand its delivery offering to 800 shops, up from 600, by the end of this year.
The 82-year-old bakery chain has not been immune to difficulties faced by high street businesses however. It has made 820 of its 22,000 staff redundant and put the majority of its shop employees on furlough between April and June. It also accessed £150m-worth of government backed loans, which it has since repaid.
Mr Whiteside said that although he expected sales during the current lockdown to be lower than during November’s restrictions, “assuming nothing gets any worse than this” he did not foresee further job losses.
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