Famous North-East baker looks to strengthen business after profits fall

The Advertiser Series: Greggs says it remains committed to the high street Greggs says it remains committed to the high street

BAKER Greggs will not relinquish its high street stronghold despite suffering a sharp fall in profits, defiant bosses have told The Northern Echo.

The firm has unveiled a five-year plan to dominate the UK's £6bn convenience snack industry after annual pre-tax profits dropped 19 per cent to £41.3m.

The Newcastle-based company also saw like-for-like sales slip 0.8 per cent for the year to December 28, as consumers reigned back spending in the ongoing austere climate, though yearly sales did increase by 3.8 per cent to £762m thanks to new store openings.

Chief executive Roger Whiteside said it was now investing £25m in staff management and stock ordering systems to save about £6m a year.

However, he warned profits would be squeezed in the first two years as the new processes are introduced.

Mr Whiteside, who took over from predecessor Ken McMeikan a year ago, also reiterated Greggs' commitment to the high street as it pushes on with plans to cut 300 in-store bakery jobs and North-East management roles, and expand into motorway services.

He said: “This has been a challenging year and 2014 will be the same, but we will be a strong presence on the high street for years to come.

“At the moment our ratio of outlets is about 80 per cent high street and 20 per cent other areas.

“In the next five years, we expect that to change to 60 per cent on the high street and 40 per cent in other places.

“Our move to food-on-the-go markets means we need to where people are constantly on the go, such as the high street.

“It's no good us being at places like sports stadiums because people aren't out and about every day in those venues.

“There are four main areas that will benefit from the £25m investment, including a system to manage staff better in shops, which, at the moment, is done by pen and paper.

“We will manage supplies better and look after our stock in one system, as well as replacing a rudimentary way of ordering to increase accuracy.”

Mr Whiteside, the former boss of Marks and Spencer's food halls, said the baker's financial results were driven by increasing competition in a difficult environment and urged caution against 2012 comparatives, when wet weather decimated customers' appetites.

He said it had now introduced a new pizza product and a a range of heat to eat sandwiches as well as improving its fillings in best-selling lines, such as steak bakes.

He said: “Greggs is a strong brand and we are encouraged by our improvement in recent months and want to build on that momentum.

“However, we'll not be getting carried away and are working on a long-term plan to achieve sustainable growth.

“It is good to see the fruits of our labours coming through and I'm proud of our team's fortitude, but there are a lot of challenges still to face and the competition will keep on coming.”

Last month, Greggs, which employs about 20,000 members of staff nationwide, revealed plans to axe about 300 in-store bakery jobs across 79 outlets in the South and West Midlands, which are remnants of Bakers Oven acquisition.

The company wants to move work to its regional bakery network, which includes a site in Gosforth making products every day for the firm's 1,671 shops.

Mr Whiteside said it was still consulting with staff, but previously added the company hoped to create some new posts in any North-East changes.

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