Greggs revealed this morning that it will shed up to 355 jobs and close a quarter of its manufacturing sites in a bid to create a more centralised operation capable of supporting 2,000 shops.
The company announced the move as part of a ‘£100m investment programme’ aimed at revolutionising its manufacturing and distribution operations following a review of the business.
Management want to transform Greggs from a decentralised traditional bakery business into a centrally-run modern food-on-the-go brand.
“Greggs is unusual in this sector in that it is vertically-integrated, owning and operating manufacturing facilities and its logistics network,” explained Roger Whiteside, chief executive of Greggs, which currently trades through almost 1,700 stores.
“Following a lengthy and detailed review we have concluded that this integrated business model gives us competitive advantage, lying at the heart of our ability to offer outstanding quality and value. We intend to invest substantially to support growth and reshape the supply chain in order to compete more effectively in the food-on-the-go market. This requires an investment of around £100m in a major programme over the next five years to create additional manufacturing centres of excellence and increase capacity to support shop expansion substantially beyond 2,000 outlets in the UK.”
Greggs currently operates from 12 bakeries, but Whiteside said that not all are suitable for long-term investment due to their location and size.
As a result, it is proposing to close three bakeries, in Twickenham, Edinburgh and Sleaford, and use the disposal proceeds to contribute to the investment in its remaining bakeries over the course of the five-year programme.
“We aim to agree a programme to transfer production and distribution operations from these sites to other bakeries in our network over the next year,” he said. “Alongside these proposed changes in our bakeries we have further steps to take in the centralisation of support services which we believe will require some restructuring amongst our teams deployed in the regions.”
Greggs will be entering into consultation shortly to work with trade unions and employee representatives. It said the planned moves may result in a total of 355 roles becoming redundant.
“These are difficult changes that we believe are needed to support the long-term growth of the business,” continued Whiteside. “However, our immediate priority is to work to minimise the negative impact on our people, many of whom have worked in these roles for a significant number of years. Wherever possible we would look to offer alternative employment to affected employees but, due to the location of our sites, we anticipate that unfortunately many will leave the business.”
Greggs also revealed that its recent acquisition of a distribution facility in London will enable it to invest in its Enfield bakery to create a “manufacturing centre of excellence” in the south east region. It is also proposing to invest in the extension of its Clydesmill bakery in Glasgow to create a centre of excellence in Scotland.