Greggs hasmade its firstannual loss since floating on the stock market nearly 40 years ago on the back of coronavirus store closures, but is staging a comeback in 2021, with plans for another 100 shops and new home delivery services.
The company, known for its sausage rolls and steak bakes, made a pretax loss of £13.7m in 2020, compared with a profit of £108m the year before. Lockdown store closures wiped more than £350m off annual sales, which fell to £811m, resulting in the first annual loss since it floated on the London Stock Exchange in 1984.
Roger Whiteside, the Greggs chief executive, said the chain had a “better-than-expected start to 2021 given the extent of lockdown conditions”.
He pointed to an improving sales picture, buoyed by a fast-growing home delivery business. The partnership with Just Eat generated about a tenth of sales in the first 10 weeks of the year and will soon be available from 800 of its 2,078 shops.
Whiteside said delivering sausage rolls and sandwiches to home and workplaces was “extra business” and not to the detriment of its shops. With two-thirds of takeaways ordered in the evening, it is experimenting with keeping its shops open later to despatch its pizza slices and chicken goujons.
“The delivery customer is different … so you are either in delivery or you are not,” Whiteside said. “They want food brought to them. It was the fastest growing channel pre-Covid and has accelerated massively. It’ll settle back a bit and then start growing again … that is what we are banking on.”
Greggs had to shut its branches for three months during the first Covid-19 lockdown a year ago, and has lost takeaway trade from commuters, shoppers and those on the school run. At the end of last year it cut 820 jobs with sales at established stores finishing down 36% in 2020.
That decline has slowed to 29% in the 10 weeks to 13 March with the company eager to resume its aggressive expansion programme. It had previously seen scope for a total of 2,500 shops in the UK but has now upped that to 3,000 against a backdrop of a growing number of empty stores and falling rents. It plans to open 100 stores in 2021, creating around 1,000 jobs.
Greggs is scouting locations in central London, such as within the Square Mile, which would previously have been unaffordable, as well as the major airports. It is also opening shops that can be accessed easily by car – such as drive-throughs and outlets in retail parks – as these have been the strongest performers during the Covid-19 crisis.
Greggs offers a “click-and-collect” service in all its stores and is developing an app that will combine the service with its existing loyalty scheme – paving the way for new offers such as a “build your own sandwich” menu.
It does not intend to offer bespoke sandwiches in its stores, only to fill orders placed in advance, as they took too long to make and “people don’t want to wait”, Whiteside said. The orders pointed to people wanting to “double up” on fillings, he added. “What I didn’t see, if I’m honest, is a lot of people thinking ‘oh good I’ll make this healthier’”.
Richard Hunter, head of markets at interactive investor, said the pandemic had “clearly left its mark on Greggs” but with the shares up by a third over the past year, investors were banking on a “potentially brighter future”. The shares closed up nearly 3% on Tuesday at £22.78.