UK food-to-go specialist Greggs has reported that in September company-managed shop like-for-like sales improved to 76.1% of 2019 levels, compared to an average of 71.2% since reopening the full estate on 2 July. These results demonstrate a recovery of sales in line with Greggs' planning assumptions.
Greggs has a total of 2,039 shops (1,720 company-managed and 319 franchised). Its store opening programme has now resumed and it expects to open a net 20 shops in 2020, predominantly in locations accessed by car.
The company says that its recent trading experience and the reactivation of the shop opening programme should help mitigate job losses in the current employee consultation as well as positioning the business for long-term growth in target locations. Rent payments are up to date and the company returned to a positive net cash position during September.
- Company-managed shop like-for-like sales improved to 76.1% of 2019 levels in the four weeks to 26 September 2020
- Higher levels of activity seen in September following slower August
- Delivery and Click & Collect options now available nationally
- Restarting shop opening programme, now expect c.20 net openings in 2020
- Further additions made to available product range as manufacturing sites reopen
- COVID-related risks being well-managed
- Consultation launched to reduce employment costs
- Adapting to uncertain trading outlook
Results achieved despite headwinds
As Greggs seated offer remained closed, they were not in a position to participate in the Government’s ‘Eat Out to Help Out’ scheme and this, along with high temperatures, made August a difficult month. However, increased out-of-home activity in September appears to have driven a recovery in customer visits. In response, Greggs are bringing back more products, including a broader sandwich range and classic favourites such as Belgian buns. In addition, 100 larger shops have now reopened customer seating with appropriate social distancing in place.
Digital offer “developing quickly”
Greggs is accelerating its digital offer, benefiting from increased investment during the lockdown period. The Click & Collect offer is now available in all shops, allowing customers to pre-order and pay ahead of visiting to collect their order. The rollout of national delivery, in partnership with Just Eat, is progressing at speed with encouraging participation levels. In the week to 26 September delivery represented 2.6% of company-managed shop sales.
Ranges reappearing but supply disruption like to be an ongoing challenge
In response to increasing demand, products are being progressively reintroduced and all manufacturing operations have been reopened. A limited COVID-19 outbreak at the Leeds distribution centre in August caused some impact to product availability in the region. Last week there was a further outbreak at the manufacturing centre in Newcastle upon Tyne and as a precaution this production operation was temporarily closed, but stock distribution was unaffected. Greggs believe this pattern of disruption to supply-side operations will be an ongoing challenge as they continue to prioritise employee safety. A new automated frozen logistics facility in the North East is on track to be commissioned in Q2 2021.
Greggs states that the outlook for trading remains uncertain, with rising COVID-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home.
Want to know more?
- For more insight on the future of UK food-to-go see our UK food-to-go market 2020-2022 report (available to Retail Analysis subscribers).
- Not a subscriber? Read the highlights here and get the latest food-to-go shopper update here. See our infographic of the key findings here.