Beloved UK high street baker Greggs has been hit hard by lockdown store closures and changing customer behaviours. Retail Week analyses how the business is future-proofing itself

  • Greggs is pinning its hopes for future growth on home delivery, which accounted for 9.6% of sales in early 2021
  • Chief executive Roger Whiteside said dinner is “the next target” for Greggs
  • Greggs is also eyeing sandwich personalisation and is targeting central London and retail parks for new stores

On paper at least, Greggs’ preliminary results for the year to January 2, 2021, did not make for comforting reading

The food-to-go specialist saw sales drop 31% to £811m in the period, while like-for-like sales at its managed, as opposed to franchise, shops tumbled 36%. 

Worst of all for shareholders was that Greggs posted a £14m pre-tax loss in the year – the first time it had tumbled into the red since it floated in 1984. 

Yet, despite its travails during a year blighted by the pandemic, its share price actually rose, as chief executive Roger Whiteside unveiled its “progressive recovery” strategy and highlighted his “confidence in the long-term growth opportunity” for the business. 

Here are the key takeaways of how Greggs is building the food-to-go business of tomorrow:

Stand and deliver

Greggs, like many other food businesses, was forced to move quickly on home delivery during the pandemic. Having spent much of 2019 trialling options, it pushed ahead with a partnership with delivery app Just Eat that launched on June 19, 2020. 

In that time, Whiteside says the service has since expanded to more than 600 stores and proved to be an invaluable revenue stream to a business. 

In its results, Greggs flagged that deliveries accounted for 5.5% of total sales in company-managed shops in its fourth quarter, a figure that grew to 9.6% of all sales in the first 10 weeks of 2021. 

Whiteside clearly believes this channel will only continue to grow, even as lockdown measures begin to unwind. 

“What we saw last year was that when our stores were closed, delivery sales went up. When they reopened, they dipped slightly, but not by a lot,” he says. 

“Online delivery was the biggest growing channel in food pre-Covid, which obviously accelerated massively through Covid. We think it’ll settle back a bit after Covid, and then it will start growing again. That’s what we’re banking on and why we’re so interested in it”. 

To harness this area of growth, Whiteside says Greggs will expand the service to more of its 2,000-plus strong store portfolio. He also says geographic catchments for deliveries have played at least some part in its plans to open 100 net new shops this year. 

Greggs has expanded its delivery menu to cater for more options. Whiteside says the growth of delivery has also seen Greggs reverse course on past plans to possibly offer dormant stores as dark kitchens for other restaurants and focus instead on later opening hours to meet demand. 

“It opens up the evening for us because we closed basically at 6pm. Two-thirds of the demand for delivered food is in the evening and we’re not even there at the minute,” he says.

Eat in or take away?

Offering a wider range of products at different times of the day has long been an ambition for Greggs, with Whiteside describing a dinner range “as the next target” for the business.

Greggs in-store seating

A ‘full coffee shop experience’ could become an option at Greggs

Home delivery will play a key role in opening up this market, says Whiteside, allowing Greggs to “extend the reach of a shop to the customers’ homes” making the evening “more accessible to us through our existing infrastructure”.

Whiteside says to cope with extra deliveries, combined with foot traffic in future, store designs are being tweaked to offer more standing space as well as windows for delivery drivers. 

However, the pandemic is also driving a review of the store estate for a future where high streets have less retail and more residential and leisure offerings, which opens up different possibilities for shops.  

“You’re never going to sit inside a majority of Greggs shops at the moment, they don’t have enough seats for a start,” he says. “But we are on a mission to improve the quality of our estate in existing catchment areas which we think will become more residential and leisure-oriented over time.”

Whiteside says that in areas where people are either working from home or travelling to an experiential leisure offering, Greggs is looking to expand stores to offer more seating. He also hinted that if those stores were opening later for evening deliveries, they could offer sit-down food services as well.

He says: “We are busy relocating and growing some of our shops to be bigger so that they have a full coffee shop experience, rather than just a takeaway. In those shops, if they are open later for deliveries, it’s possible that some people will also be open to sit in and eat if they want”.

Pick and mix

Another key area Greggs is focusing on is food personalisation, which Whiteside says is “one of the big trends in food consumption”. 

Greggs pizza

Greggs is trialling personalisation of pizzas and sandwiches

“People are becoming fussier about their food,” he added. “They are wanting their food made specifically the way they want it, not the way you’ve made it in advance.”

To that end, Greggs is currently trialling making sandwiches to order for customers to order through the food-to-go specialist’s app, which it plans to launch later this year. 

Though currently just a one-shop trial, Whiteside says personalisation is an “exciting prospect” for Greggs.

“We hope to get to a point where customers can basically build their own sandwich or pizza. We can’t do that with our sausage rolls or pies, for example, because they are made in a factory and then we bake them off in the shop.

“It’s just sandwiches and pizza at this stage, but that doesn’t mean there might not be something else in the future,” he says

Planes, trains and automobiles

While the coronavirus pandemic has forced a number of key strategic shifts for Greggs in the last year, Whiteside is convinced its previous store expansion policy still has merit. 

With the pandemic forcing many operators to close and driving down rents in inner-city locations, Whiteside believes the pandemic might actually present Greggs with an opportunity to expand into places it’s currently underrepresented in, such as the City of London.

Greggs London

Greggs could open more stores in London and inner cities

“What Covid has done, obviously, has opened up some of the areas that we previously found difficult to access,” he says. “The way Covid has impacted the market more generally in areas like central London and other mass transport hubs means the availability of property has climbed because there are fewer people there now to compete for it”. 

Whiteside says Greggs has recently taken a store in St Pancras station and is looking at more central locations, despite some worries in the property market that commuter footfall won’t ever return to previous levels. 

“I can’t believe that [post-Covid] London won’t be super busy. It might not be as busy as it was, but then we won’t be paying rent like we were or would have had to. So from that point of view, it represents an opportunity for us.”

Whiteside says Greggs has also been pushing on with opening in “all major airports” around the UK, although most won’t be ready to take advantage of any travel surge in the summer post-vaccination. 

Greggs has committed to opening 100 net new stores in 2021, but in the longer term, Whiteside sees the biggest opportunity in terms of new stores in retail parks. 

“By our estimation, there are 1,300 retail parks in the UK, and Greggs is present currently in just 100 of them,” he says. “All of those retail parks are being assessed for Greggs because retail parks are easy-to-access car venues that serve a dual purpose”.

While Greggs performance was hampered in 2020 due to coronavirus, the business is pivoting online at a rapid rate, refurbishing its existing store estate and expanding into new areas, without throwing away the progress it made before the pandemic struck.