Roger Whiteside unveils new strategy for Greggs: Greggs chief executive Roger Whiteside has unveiled his new strategy for the business. Whiteside, who was previously chief executive of Punch, will place a new emphasis on food on the go, a process that will take two or three years of reshaping of the business during which time there will be limited net shop openings. He said: “Since taking over as Chief Executive in March I have worked with the senior management team to conduct a thorough review of the business which concluded in July and is resulting in some changes to our strategy. Whilst over many years Greggs has developed a leading position in the bakery market, customer preferences are shifting towards ‘food on the go’. Food on the go is a £6 billion market growing at an annual rate of 9% (source: Allegra) and some 75% of customer visits to Greggs are already fulfilling a food on the go need. Whilst Greggs has defended its position as the leading retail bakery business it has underperformed the food on the go market as new entrants and existing competitors have rapidly expanded shop numbers and better met customer demands. With Greggs’ strong brand and national coverage we see significant opportunities in this area and so a number of changes are being announced today that will position us better for medium and long term growth.Greggs is a much-loved and trusted brand and we can leverage our heritage in fresh bakery to compete successfully in the food on the go market. We believe in simple, good quality, great-tasting food at affordable and competitive prices. We own and run our own bakeries so we know and can control exactly what goes into our food; and because we are a daily-fresh business we have an advantage over those competitors who need to keep products on the shelves for longer.Greggs is a brand with broad appeal, attracting customers of all types and we have the opportunity to fulfil more of their needs by focusing on food on the go at all times of the day. We are already beginning to make changes to our product offering to reflect our new focus, with encouraging early results. Our sweet range has been simplified and redeveloped to offer more contemporary products better suited to snacking or a treat to go with lunch. We have introduced a new pizza product that has quickly become one of our best-selling lines - popular at lunchtime but also perfect for afternoon and evening snacking. We have improved the filling recipes in our best-selling Steak Bakes and Sausage and Bean Melts. We also have further product developments and upgrades in the pipeline with many opportunities to continue to improve our product offer and develop our position in the food on the go market. Changes are also already taking shape in our service offer to reflect better the needs of the food on the go customer. One of our key points of difference is that we make all of our sandwiches fresh each day in our shops and so we have started bringing our teams in earlier, before opening the shop, in order to make sure that we have full availability of sandwiches for the growing number of customers coming to us for breakfast who want to save time by buying lunch as well. Snacking in the afternoon is also a growing trend so we have started opening our shops later and improving availability at that time of day. Customer engagement is a key feature of success in the food on the go market. In the weeks ahead we will be launching our first digital customer loyalty scheme, “Greggs Rewards”, which will provide a platform for us to carry out more targeted customer engagement activity. In recent years we have prioritised growing shop numbers as we sought to make Greggs accessible to more customers and leverage capacity in our bakeries. We continue to believe in the opportunity for increased shop numbers in the long term and our target remains in excess of 2,000 shops. However our priority for the next two to three years will be to improve the quality of our existing estate. Long term consumer trends affecting where and how customers shop demand a progressive reshaping of our estate. This will be achieved predominantly through a combination of shop relocations and reformatting, together with some shop closures in failing catchments. New shop openings will continue to be focused on workplace locations together with franchise operations, predominantly in travel locations. Greggs has developed two separate shop formats: the ‘Food on the go format’ and the ‘Local bakery’ format. Whilst both have been successful we have decided to simplify our approach by combining the best aspects of each concept to create our new ‘Bakery food on the go’ format. We currently have nine shops which have been converted to the Bakery food on the go format and have been encouraged by their early results with double-digit sales increases. From now on our shop refit programme will be in this format and we expect to complete a further 130-150 such refits this year. The advantage of a single brand format is that it can be flexed for size and range to target different demographics whilst keeping a simple operational base. Important new features in these shops include the provision of seating for customers where appropriate, improved customer flow and more efficient queue management. The look and feel of this new format draws on our heritage in fresh bakery for the food on the go market. Our franchise operation with Moto Hospitality Limited has been very successful and has now been extended to 21 shops. Three more shops are due to open this year and it is Moto’s intention to open a further 14 next year. Gaining access to closed transport catchments through franchise arrangements is attractive and we have reached agreement with Euro Garages to test this model on two of their sites. In recent years we have tested a number of new ventures with the potential to take the Greggs brand to new markets. Our future focus will be on the food on the go market and, as a consequence, we have decided not to make the development of new markets a priority and have taken the following decisions: Our wholesale “bake at home” business with Iceland will continue but we will not be seeking to extend this area of the business to further customers; In 2011 we also launched a trial to see if we could develop a successful coffee shop format chain branded as Greggs Moment. Whilst we have been encouraged by initial sales we have decided to concentrate our efforts to compete in the coffee market by developing Greggs shops with seats alongside our own coffee offer. We have learned much about the coffee market from this trial and this will be built into our Greggs offer as we move forward in this important area. We will aim to incorporate the existing ‘Moment’ shops, wherever possible, back into the core Greggs estate; We have no plans to develop an international business in the near future.” Total sales were up 3.4% to £362m in the 26 weeks ended 29 June although like-for-likes dropped 2.9% resulting in pre-tax profit down £4.6m to £11.4m.