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Greggs set to reorganise Bakers Oven after flat demand

08 August 2006

Greggs, the sandwich shop and bakery chain, is reorganising its Bakers Oven division after being further hit by flat demand and soaring costs.

The biggest problem is in North-east England, Yorkshire and Scotland. In these regions, 49 Bakers Ovens are to be re-branded as Greggs and 14 shut with the loss of 200 jobs.

Bakers Oven has a higher level of in-store catering than Greggs which is more focused on take-away food.

During the 24 weeks to 17 June, like-for-like sales at Greggs were down 0.3% but up 0.8% at Bakers Oven. But despite these sales figures, Bakers Oven made a reduced contribution overall, primarily due to the weakness of its outlets in the North of England and Scotland.

Greggs said that its target of reaching 1,700 outlets by 2010 is no longer realistic. It had 1,114 Greggs branded outlets at 17 June and 216 Bakers Oven. The number of Bakers Oven outlets will shrink to barely more than 150 after the reorganisation.

The company said that a number of trials of innovatory retail formats, locations and opening hours are under way to explore additional growth opportunities. Pre-tax profit during the period fell 20% to £12.5m. Energy costs were up 69% year-on-year.

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