Greggs Case Study – Business Report of Greggs

“To be successful, you have to have your heart in your business, and your business in your heart.”
By Thomas Watson, Sr.

Subject : Business Report of Greggs

1. Executive Summary
- Greggs is the top bakers’ chain in UK.
- Greggs owned 1400 shops and employ 19,000 workers.
- Ken McMeikan – Chief Executive leads Greggs to success.
- Greggs has a good performance in the economic downturn.
- Changes and strategies help Greggs to defy economic downturn.
- Greggs is planning for an international expansion.
- Greggs is a company responsible to its stakeholders – customers, employees and shareholders.
- Part of the ideas are generating from analysis of Greggs’ reports and PESTEL analysis.
2. Introduction Greggs is a national company which has recently owned more than 1400 shops in UK. After the closure of its Belgium operation, Greggs changed from a decentralized to a centrally run business. This successful bakery chain is led by Mr. McMeikan who served under some of the most-respected retail sectors’ leaders before. In the near future they are planning to open a further 600 shops to create 6000 new jobs and will carry out an international expansion in the next few years. In the report, we can see the latest performance of Greggs, how its chief executive manages the changes and the considerations of the business development and how it treats its stakeholders.

3. Environment that Greggs works in Greggs holds on to its top position as the UK’s largest bakery retailer by the narrowest margin in British Baker’s new BB75 league table for 2010 – covering the 75 biggest bakery retailers in the UK and its strong competitor Subway is in second place. Also, the table shows Costa Coffee (at number three) was the fastest-growing coffee chain in the UK, adding 185 sites over 2009 (See Appendix 1). Although Greggs planned to open further shops, it is not the fastest growing shops. This shows that Greggs is operating in a highly competitive market and there is a risk of being overtaken from the top place. According to Subway is development agent Neil Black, Subway predicted it would overtake Greggs by last summer. (Feedback on the new Bakers league table, Jan 2009) Moreover, it produces fresh products to customers everyday and operating in a changing environment, for instance the economic downturn fluctuates the business environment, changing of baking technology, products’ prices changing of competitors, change of customers’ lifestyle, etc. So Greggs is working in a high dynamic and complexity environment. (Boddy, D., 2008) (See Appendix 2)
4. Figures of performance The Financial report shows that over the four week Christmas trading period total sales grew by 3.1 per cent and like-for-like sales grew by 1.1 per cent against strong comparatives in the prior year. Also, Profit before taxation increased by 7.3 per cent to £16.5 million comparing with 15.4 million in 2008 (Greggs Interim Report 2009). The evidence shows that Greggs has been doing well recently despite it is operating in the economic downturn. The underlying reason is that several critical decisions were made by Mr. McMeikan who helped the company to have a good performance in such a harsh business environment.
5. Chief Executive of Greggs Ken McMeikan, 43, chief executive of Greggs, joined the Royal Navy at 16. According to his speaking, the services taught him the importance of teamwork, preparation, planning and how to move large numbers of people and to get them in the right place at the right time. (Thompson, J., Nov 2009) He plays the decisional – disturbance handler role in Mintzberg, H. (1973)’s ten management roles theory. He takes corrective action during crises and likes to adapt to changes which fulfill what Greggs needs in the recent years. Also, he likes to visit Greggs’ shops each week to supervise on the operation. Moreover, he plans to open further shops and carry out an international expansion. Furthermore, Mr. McMeikan’s join has strengthened Greggs’ excellent senior management team and is helping to drive forward the development of Greggs as a more centrally driven and customer-focused national brand. According to managerial grid, he is a team style manager and his plans combined with his experience help Greggs to remain in the top position among all the others. (See Appendix 3)
6. Strategies that Greggs used to defy economic Downturn 6.1 Location of Greggs According to Andrew Williams, deputy editor of British Baker magazine, Greggs the baker is a 21st Century British High Street phenomenon. With twice the number of outlets as Starbucks, and 200 more than McDonald's, it is by far the largest food-to-go operator on the High Street. (Kent, T., Nov 2009). Greggs is often located on the UK’s high streets where main commercial and retail business can be founded there and the accessibility is high because it spotted that the chain bar concept is becoming tired and falling out of favour. So in the future, we expect to see more gastro pubs and other food outlets on the high streets (Fletcher, H., Jan 2009). 6.2 Best Value Products Moreover, they tried to boost up their sales in the economic downturn by on sales products and promotion. “What we are seeing is only the early stages of a period when consumers are prepared to shop around in pursuit of the best value they can get for their money.” said Ken McMeikan. (Bowers and Finch, Jan 2009) As a result, their operating profit increased by 8.9 per cent to £16.3 million. “There's a huge chunk of blokes who want lots of food cheaply - it's doing that job absolutely superbly” said Richard Huntington, a branding expert. (Kent, T., Nov 2009) As well as increasing the amount of sales, they also focus on the quality. “It is important to focus on the quality of the shops, this is not a race for space,” said McMeikan. (Greggs leads major new UK bakery league table, Jan 2010) When they sign a contract, it is usually for 10 years, with a break at five years. They want to find really good-quality units as they are in it for the long term. 6.3 Using of Information Technology Furthermore, they are always seeking for innovation especially by making new products and new promotion methods. Ken McMeikan said: “We had a particularly superb product in the festive bake which was launched last year and were going to reintroduce it.” (O’Doherty, J., Jan 2010) They also have a Facebook fans group which group people who love Greggs’ products together and they can listen to every single comment on their performance. Moreover, they use Facebook to help to maintain profitability of the business. “A Facebook pastry campaign helped boost festive season sales at Greggs and helped 23 per cent increase year sales were quite phenomenal” (O’Doherty, J., Jan 2010). Not only for gaining profit of the company, they also care about the health of the customers. They have already removed all added hydrogenated and transfats from products that Greggs bakes. And they are trying to ditch artificial colours and flavouring within this year. This move increases the customer satisfaction. 6.4 Network of Greggs However, it's the economic downturn of the past two years that has really helped catapult Greggs to its current level of success. As household budgets have been squeezed, Greggs' brand of comfort food is enjoying resurgence. They built up a strong network and rebranded Bakers Oven to Greggs so the switch to the Greggs name will give customers a more rounded experience and help the group to reduce buying and advertising costs. Also, the network gives them a great competitive advantage as they can deliver fresh products to shops conveniently. (See Appendix 4) The changes carried out, the sales figures shown, the growing rate, all of them show the perfect performance of Greggs in the economic downturn.
7. Future development of Greggs Greggs plans to expand its business to overseas market. They aim to have a larger network as to enjoy the economics of scale and gain more investment. Mr. McMeikan said that Greggs has the great opportunity to expand internationally while stressing that overseas is a long term priority (Thompson, J., Nov 2009). In the past they closed the Belgium operation and focused on the national development. The closure in Belgium operation is due to 10 shops have been maintaining a loss for five years which may affect Greggs’ overall performance and reputation. This action shows that they want to build up a good foundation in UK before any expansions and now they did. In 2010, McMeikan is planning to have a number of international fact-finding missions in search of potential new markets for Greggs (Mernin, A., Jan 2009). The operation in Belgium gives Greggs good experience to learn about expansion to overseas. As Mr. McMeikan had helped Tesco to get into the Asian market before, there may be a great opportunity for him to mobilise his troops for an assault in Asia. They can choose a suitable market by using Porter’s five forces analysis and competitive analysis as they can give clear ideas for the expansion. (Brooks, I., 2004) (See Appendix 5) “The growth opportunities in the UK are still significant but for the longer term plan for growth in the coming years, I’ll start looking at some of those countries very seriously.” said Mr. McMeikan (Mernin, A., Jan 2009). This shows that the group can’t only rely on the UK business but to explore new markets. Although they have experience and good planning, they still have much to work on.
8. Conclusion The business is doing very well in the current period of time. Greggs put customers as its first priority which gives it a good customer’s loyalty. The group tries to widen the product range and produce healthy food. Also, the figures show that its trading performance is doing well in the economic downturn which is good for the company and shareholders. It has experienced a series of changes which brought it to the top position into UK. The rebrand of Baker Oven gives Greggs a better reputation and support. Moreover, Greggs plans to open further shops in the UK to create more jobs and it tries to reconstruct its shops by reducing energy they consume. It not only provides quality food for the public, it also does a lot of charity works. It is a company that is working in an environmentally friendly and socially-responsible way. Furthermore, Greggs has built up a great network that provides fresh products to shops through delivery. Last but not least, the group believes in employee-centric philosophy which gives an idea of the business cycle. When the company treats its customers, employees and shareholders well, they will return what the company needs, like investing into the business. So it is very important to be responsible to the stakeholders because they have the voting rights and power which can control the development direction of the company. As a result, Greggs has increased the dividend paid to the shareholders while it maintains a profit. As a whole the performance of Greggs is within expectation of the group and is doing well.

Reference
Boddy, D., 2008, Management An Introduction, PESTEL Analysis, 4th Edition, Prentice Hall, Financial Times, p.102,120.
Bowers, S. and Finch, J., 8 Jan 2009, Takeaways cash in as restaurants feel pinch in new era of austerity, [Online] Available at http://www.guardian.co.uk/business/2009/jan/08/fooddrinks-foodanddrink (assessed 22/2/2010)
Brooks, I., Weatherston, J., Wilkinson, G., 2004, The International Business Environment 1st Edition, Prentice Hall, Financial Times.
Fletcher, H., Jan 2009, The future of the British high street, [Online] Available at http://women.timesonline.co.uk/tol/life_and_style/women/the_way_we_live/article5469229.ece (Assessed 22/2/2010)
Feedback on the new Bakers league table, Jan 2009, [Online] Available at http://www.bakeryinfo.co.uk/news (Assessed 22/2/2010)
Greggs 2009, Greggs Interim Report 2009, [Online] Available at http://www.greggs.co.uk (Assessed 22/2/2010)
Greggs leads major new UK bakery league table, 14 January, 2010, [Online] Available at http://www.bakeryinfo.co.uk/news/fullstory.php/aid/6256/Greggs_leads_major_new_UK_bakery_league_table.html (Assessed 22/2/2010)
Kent, T., 9 November 2009, How did Greggs conquer the High Street? BBC News Magazine, [Online] Available at http://news.bbc.co.uk/1/hi/8330573.st (Assessed 22/2/2010)

Mernin, A., 5 Jan 2009, A new man in the Greggs boardroom, [Online] Available at http://www.nebusiness.co.uk/business-news/interviews-with-business-people/2009/01/05/a-new-man-in-the-greggs-boardroom-51140-22604342/ (Assessed 22/2/2010)
Mintzberg, H., Lampel, J., Quinn, J.B., Ghoshal, S., 2003, The Strategy Process, Mintzberg’s Ten Management Roles, 4th Edition, Person Education Limited
O’Doherty, J., 13 Jan 2010, Greggs warmed by new mince pies, London Stock Exchange, UK Financial Times, [Online] Available at www.uk.finance.yahoo.com (Assessed 22/2/2010)
Thompson, J., 19 Nov 2009, Ken McMeikan: Meet the bakery chain chief on a roll, [Online] Available at www.independent.co.uk (Assessed 22/2/2010)