Greggs the baker, serving up profits

By having consumers tuck into their value-for-money pasties, cakes, buns and sausage rolls, Baker, Greggs posted a record 2010 profit in a tough economic climate. The Newcastle based company has over 1,490 shops that sell bread and sandwiches to some six million customers weekly hopes to make additional progress in 2011 despite worldwide rising prices and declining disposable income.

Chief Executive Ken McMeian told reporters that he feels their strength is greater value for money spent and that people will be looking for that since they still need to eat and enjoy their lives as much as possible. A value meal they offer for 1.99 pounds has a bacon or sausage roll and coffee or tea and since a February 2010 launch over 12 million rolls have been sold.

They want to continue to pressure the breakfast, coffee and hot sandwich market by opening over 80 new stores in 2011 and look for like-for-like marginal sales growth. Over the last month shares have fallen close to 5% but after the announcement they were up 4% putting the book value of the business at 490 million pounds.

John Dickinson, a Brewin Dolphin analyst said there plenty of possibility for well above average growth, with a potential for another 600 stores, going forward. While many struggled in the recent recession, Greggs with its low ticket transactions did much better than most making a pre tax 52.5 million pound profit in 2010.

A net of 68 new stores were opened with sales up .2% at stores of more than one year and up .5% to 7.9% in operating margin with an overall increase of sales of 2% to 662 million pounds.