Tucking into a Portion of Greggs Commercial Property

Posted on 21 August, 2011 by MOVEHUT

Like its customers, Greggs is hungry. Hungry for expansion, it is eyeing up its options, seeking to sate its appetite. Not for cakes or Cornish pasties – but for commercial property.

The specialist bakery, with 1,500 branches across the UK, has announced half-year pre-tax profits before exceptional items of £17.3m, down from £18.5m on the previous period. Profits may have fallen, but sales were up 4.2%, at £335m.

The hunger of Greggs for commercial property, evident in 2010 when 68 new shops opened, is retained. Plans to open 80 further outlets and refit an existing 120 this year are said to be on schedule.

Causing some indigestion were the recent riots across the country, which took their toll on the current stock of commercial property. The Peckham branch was described as ‘pretty much ruined’ after a fire gutted the adjacent building. In Enfield a branch was looted and an employee making deliveries was assaulted in London.

Despite these incidents the company say, ‘the overall financial impact will be very small. Relative to other retailers, we have had low impact in terms of damage’.

Established in Newcastle upon Tyne, Greggs was launched onto the market in the 1930s. The 1960s and 1970s witnessed major growth and at the turn of the century it dipped into foreign commercial property markets, opening ten stores in Belgium. These have now closed, and the focus is back on the UK.

The company’s strategy of capitalising on cheap commercial property rents on Britain’s high streets and opening in industrial estates and UK travel hubs has been met with approval by analysts.

Something that could hold their commercial property progress up is the potential for increases in their raw material prices as food costs have the potential to rise later this year.

For Greggs, this may mean difficulty during the second half of the year with potential falls in profit margins.

For its customers, the only difficulty is likely to be just how to eat a Greggs jam doughnut without getting sugar all over yourself!

 



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