Sales have boomed over the past year, culminating in a string of profit upgrades. Like-for-likes have jumped by a scarcely believable 11.1% so far in 2019, and bosses now expect full-year profits to be “materially higher” than previous estimates.
Perhaps even more impressively, Greggs has managed to turn things around at a time when almost all of its retail and restaurant peers have, almost without exception, found the going tough.
It’s a far cry from the beginning of 2013, when Greggs’ like-for-likes were on the way down and profits were plunging.
In a bid to turn things around, the board turned to Roger Whiteside, who was then the boss of Punch Taverns and a long-term non-executive director at Greggs.
The strategy he adopted six years ago laid the foundations for where Greggs finds itself today: a £2bn company that is consistently outperforming its rivals on the high street and on the FTSE 250.
Raft of changes
Within months of taking over from Ken McMeikan as Greggs’ chief executive, Whiteside had laid bare his plans to get the company back to growth.
There were simple changes: staff were told to get in earlier and prep the sandwiches before the doors opened, while stores stayed open later to take advantage of the growing trend of afternoon snacks.
He made improvements to the fillings of various pasties, while he also brought in new products, including pizzas, which quickly became some of the most popular items on the menu.
Whiteside made it clear he wouldn’t be looking to crack overseas markets any time soon, and he also reined in the rapid expansion in the UK, preferring instead to focus on improving the existing store estate.
Linked to that easing of the accelerator, Whiteside made a conscious decision to open any new stores away from the high street, where declining footfall had already started to affect businesses.
Instead, he focused on other locations, particularly those near workplaces, train stations and other “travel and leisure destinations” that had been less affected by the high street’s woes.
This was part of his biggest ploy: to take Greggs to the top of the booming food-on-the-go market.
People were no longer buying food to take and eat at home or in the office, they were grabbing a sandwich or pasty while they rushed between jobs.
Whiteside felt the business was missing a trick by not focusing exclusively on this market, especially given that it made up most of Greggs’ sales.
Almost six years after the changes were first mooted, the effect is clear: Greggs is now the leading food-on-the-go retailer in the UK, serving more than six million customers a week.
Most of the strategies brought in Whiteside’s early days remain in place to this day. New openings, for example, are still targeted in travel and workplace catchments.
Only today, the company said: “The success of sites such as our new unit at London Bridge station give us confidence to pursue further openings in similar locations.”
Product innovation hasn’t slowed either, with the launch of the vegan sausage roll earlier this year credited with driving the recent sales surge.
The breakfast menu has been expanded as well with the addition of a new range of improved coffees back in 2016, while Balanced Choice meals target calorie-conscious consumers.
Well-paid, but well-deserved
Going forward, Greggs is looking to capitalise on its new-found vegan fame by launching a new and improved Mexican bean and sweet potato wrap.
It is also within a touch of hitting its long-held target of operating from 2,000 shops, with the figure currently at 1,969.
That’s not many more shops than it had at the start of 2014, but the share price tells the real story about the performance of those stores, having almost quadrupled in that timeframe.
Whiteside has pocketed around £10mln from Greggs for his troubles during that period. Given the performance of the shares, some investors might say that’s not enough.