Greggs on a roll – and now it's aiming to join the breakfast club

Published on Thursday 18 March 2010 20:16

LUNCHTIME favourite Greggs is on a drive to attract customers for breakfast and dinner, too, as it strives to squeeze more out of its hundreds of bakeries.

The Newcastle-headquartered group has emerged as a winner in the recession, reporting a 5 per cent rise in sales to 658 million in 2009.

Pre-tax profits climbed 8 per cent to 48.8m, allowing the company to raise its dividend by 11.4p to 16.6p, the 25th straight year of dividend growth since the company floated on the London Stock Exchange.

Chief executive Ken McMeikan said Greggs had identified early morning trading as the best opportunity to boost growth, with only 5 per cent of its sales coming before 9am last year.

It has launched breakfast specials for coffee and breakfast rolls, and has already seen a strong increase in early-morning sales.

McMeikan said: "In the year ahead, we believe breakfast presents a really good growth opportunity for Greggs."

He added the company was also seeking to add customers in the late afternoon – only about 2 per cent of sales come after 5pm.

Last year included a significant amount of structural change for Greggs, with the streamlining of its bakery division, the closure of its Belgian arm, and the rebranding of two-thirds of its Bakers Oven shops as Greggs.

It also removed all artificial colouring from its food and began taking out artificial flavourings, a process McMeikan said would be completed this year.

This year, the company will focus on expansion, with at least 50 new stores to be opened in 2010, and 70 a year from 2011 onwards. Currently, Greggs has just over 1,400 stores.

McMeikan said the expansion would be weighted towards Scotland and the south of England, where the company has less of a presence, with fewer openings in the north of England, its traditional heartland.

It will also refit more than 100 stores this year, which McMeikan said would "improve the shopping experience", with more self-service, giving shoppers greater opportunity to browse before buying.

Greggs said last year that it planned to open 70 stores and create 800 new jobs in Scotland over the next five years.

The financial results were slightly ahead of market expectations. Greggs also gave a tentatively optimistic outlook, predicting a "benign" ingredients market in the coming months.

It also predicted "marginal" like-for-like growth because of continuing uncertainty over unemployment.

Shore Capital said it expected to raise its pre-tax profit forecast to 51m.

Shares rose 4.2 per cent to 455.3p, the highest level since last October.