The huge boost to Greggs' profile that emerged from the campaign it led to defeat the British government over a proposed "pasty tax" has given the growth plans of the nation's largest food-on-the-go retailer a major stimulus, its CEO said.
"There's no question the awareness of Greggs as a brand has grown. People who hadn't heard of Greggs probably have now," Ken McMeikan told Reuters on Thursday.
In May he forced Chancellor, George Osborne, into an embarrassing U-turn over his plan to impose a 20 percent VAT sales tax on fresh-baked savouries, such as sausage rolls, Cornish pasties and steak bakes, that are sold warm, the so-called "pasty tax".
If the levy had been imposed it could have seriously dented Greggs' sales and profit.
Having emerged victorious from "pasty gate" McMeikan, a former Tesco and J Sainsbury executive and Royal Navy veteran of the 1982 Falklands War, is focusing his energies on what he believes are enormous opportunities to grow the firm in the UK and ultimately in overseas markets.
Greggs, which sells sandwiches, savouries, bread, cakes and pastries to over 6 million customers a week, currently trades from about 1,600 UK stores, more than McDonald's, and is targeting 2,000 plus. It plans a net 90 new stores in 2012-13.
Speaking in an interview at the new "Greggs moment" coffee shop in Gosforth, near Newcastle, north east England, McMeikan detailed his new plan to segment the firm's store estate into three distinct formats -- core food-on-the-go, local bakeries and coffee shops.
He said the firm will have six "Greggs moment" coffee shops up and running by August and will make a decision by the year-end on a full nationwide roll-out to take a greater share of a British coffee shop market that is forecast to grow from 5.5 billion pounds now to 7 billion pounds by 2015.
"I'm a great admirer of what (Whitbread's) Costa Coffee have done and the question for Greggs is: Can we learn at pace and take a much bigger slice of the coffee market," said the CEO.
Similarly he reckons "potentially hundreds of shops" can be converted to the firm's new "Greggs The Bakery" concept format, the first of which opened last month in Gosforth, just doors away from the very first Greggs shop which opened in 1951.
The new store format offers a larger and more traditional range of bakery products.
WHOLESALE DEALS
McMeikan is also keen to build on a deal with Moto Hospitality to open more franchise stores at motorway service stations and on a wholesale deal with Iceland Foods, which has seen nine of Greggs' product lines sold in the frozen food specialist's 750 UK stores.
He said the firm was exploring wholesaling different products through different channels.
UK consumers are grappling with higher prices, meagre wage growth, job insecurity and government austerity measures.
Greggs, with its relatively low average transaction value of just over 2 pounds, has fared better than most in the downturn.
McMeikan said he did not anticipate any significant change in the macro environment any time soon, though commodity cost inflation was slowing.
"It's an improving (commodity) picture but it's not translating sufficiently into the UK consumer having more money in their pockets at a fast enough rate," he said.
And he is keen to see the back of Britain's awful summer weather which has seen record rainfall in both April and June.
As an extremely weather sensitive business Greggs' recent sales have suffered in the deluge.
McMeikan has a resonance with his customer base -- he travelled standard rather than first class on Thursday's rail trip from London to Newcastle and says he always does.
One of the by-products of "pasty gate" has been to substantially raise his national profile.
Analysts have put him in the frame for bigger jobs but he says he is staying put.
"My job is to run Greggs, my focus is on running Greggs.
There's still plenty to do here.
I'm four years in, my predecessor was here for 26 years, Greggs is my family."
Shares in the firm closed Thursday at 507 pence, valuing the business at 511 million pounds.
(Reporting by James Davey; Editing by Phil Berlowitz)
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Source: reuters
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