Greggs rolls out five-year growth plan
In many ways 2019 was a landmark year for food-on-the-go retailer Greggs (GRG). Not only did it record its highest ever level of like-for-like growth at 9.2%, it opened its 2,000th store and pre-tax profit topped £100m for the first time.
Far from resting on its laurels, the firm has plans in place to expand both in terms of number of stores and their type and location in order to grab an even bigger piece of the £24bn convenience food market.
While conditions in the retail and casual dining sectors remain tricky, the food-on-the-go market continues to grow. Thanks to its reputation for quality and service, Greggs has managed to capture a rising share of this growing market but it has plenty of room to continue expanding.
Nine out of 10 consumers are aware of the brand, yet only a third would consider visiting a Greggs store, according to research by the company. While this is an improvement on five years ago, it shows the scale of the opportunity to convert more consumers into customers.
One way to achieve this goal is by opening more stores, and chief executive Roger Whiteside is convinced there is scope to go beyond the 2,500 stores envisaged under the current plan, for which the supply chain is already primed.
While around 60% of stores are on the high street, new stores will be concentrated in retail parks, service stations and, potentially, supermarkets.
Greggs is testing five new outlets inside Asda superstores on the basis that customers want ‘food for now’ alongside ‘food for later’. If successful, there is scope to roll out many more stores with Asda and possibly with rival supermarkets.
At the same time, coffee-on-the-go has become an important part of Greggs’ repertoire and a number of stores have been expanded to become food-led coffee shops with considerable success.
As well as capturing more walk-in customers, the firm has been piloting food deliveries with Just Eat and is preparing to roll out a nationwide service.
Food delivery is the fastest-growing segment of the food-on-the-go market and the trial has experienced surprisingly strong demand for breakfast and lunch deliveries, periods which are typically quiet for Just Eat.
For Greggs this is also an opportunity to get into the market and hone its evening offering, when its stores are typically less busy and have the capacity to continue operating.
The combination of a multi-channel offering and an expanded store network should see Greggs become an even more compelling option not just for consumers but for investors too.