Following today’s Q1 results from Greggs the company said it is looking beyond the high street for new shop openings and plans to boost average customer spend with hot drinks and promotions including its successful loyalty card scheme.
Chief executive Roger Whiteside said that with high streets in decline Greggs will reduce the focus of its estate at high street locations, which currently accounts for 80% of stores, and aims for 60% on high streets and double its number away in other locations such as transport hubs to 40%. This shift is partly due to the current saturation of high streets.
The move away from the high street will include an increase in stores at transport locations including the Isle of Wight ferry terminal in Portsmouth opening this May. In 2013, 70% of new store openings were away from the high street.
The company will continue its promotional loyalty card scheme, which has already seen “thousands” of people sign up, to boost the average customer spend from £2.60 at present. The entirely digital loyalty scheme launched allows customers to earn points to claim rewards in-store.
One tactic for increasing average spend is encouraging the sale of a hot drink with every purchase; the upselling has already begun with breakfast and lunch meal deals and coffee and cake promotions.
Whiteside said that although the rising retail price of coffee will impact in store prices, he is confident Greggs’ coffee will still “represent exceptional value” compared to competitors. This confidence has been reassured by the results of a blind taste test of 2,000 participants who said they prefer the taste of Greggs’ coffee.
Whiteside expects trading for the second half of the year to be more challenging with commodity price rises expected across a range of ingredients however he said the company still expects to deliver satisfactory results for the year. There is some uncertainty of the cost increases but deflated prices of many ingredients including flour, tuna, and meat are expected to rise.
Whiteside said the company is on target for 200 refits this year and through its accelerated closure plans it has disposed of several freehold sites resulting in profit gain of £1.4m.
The redundancy programme is now complete with 360 people let go, mostly related to the closure of 79 in-store bakeries. Greggs currently employees c.20,000 people nationally.
