Welcome to Greggs Operating Board Ken McMeikan Richard Hutton - PowerPoint PPT Presentation

Welcome to Greggs

Operating Board Ken McMeikan Richard Hutton Raymond Reynolds Martin Kibler CEO Finance, IT & Retail & Shop Trading & Business Property Director Development Director Development Director 4 Years at Greggs 14 Years at Greggs 25 Years at Greggs 11 Years at Greggs Previously: Previously: Previously: Previously: • Sears (UK) • Procter and Gamble • Freezway Frozen Foods • RHM Retail Limited • Tesco • KPMG • Travellers Fare (SSP) • Sainsbury‟s Nigel Oldham Gavin Kirk Roisin Currie Jonathan Jowett Supply Chain Supply Chain People Director Company Secretary & Development Director Operations Director General Counsel 13 Years at Greggs 5 Months at Greggs 2 Years at Greggs 2 Years at Greggs Previously: Previously: Previously: Previously: • Foxes Biscuits • APV Baker • Asda • Wagon • United Biscuits • Mars • Bakkavor • Cadbury Schweppes 2

Tony Rowson – New Head of Coffee • Costa for 9 years – Regional Operations Director for 6 years – 200 shops in the South • International experience – Hard Rock Cafe – 4 years – Hong Kong • Started yesterday 3

Creation of a single Planned brand, Exit from Bakery Belgium closure 10 divisions 80% reducing PREPARING harmonised to 7 range THE regions FOUNDATIONS FOR GROWTH New Trading Removal IN 2009 function & of artificial Group colours & Trading flavours Director Removal Centrally Nutritional of trans Run labelling of fats & Business core HVOs, range, 4

Significant UK Shop Ambition to Segmenting Expansion get margins Shops into to 8% + 3 formats New Maintaining channels to market – value through wholesaling price & & promotions franchising DELIVERING Strong cash Accessing generation THE GROWTH the Bake at to finance Home growth OPPORTUNITY Market Greater Share of International the Coffee Expansion Market Supply Chain Broadening Investing in efficiencies our range in Supply of £15m per health Chain annum capacity for growth 5

Our strategy to grow the Greggs Brand Based on 5 key pillars: • Meeting evolving consumer needs • Investing in shops • Accessing new markets • Delivering competitive advantage through our supply chain • Living Greggs values through our people and our communities 6

Meeting Evolving Consumer Needs

From Bakery Roots to “Food on the Go” Development of the Greggs Offer 100% 80% 60% Bread and Rolls Drinks 40% Sandwiches Savoury 20% Sweet 0% 1973 1984 1996 2011 8

Healthier Options Hot Sandwiches Responding to Customer demand Breakfast Continued roll out Great sales opportunity Meeting Take Coffee evolving home Continue to build sales consumer Brand extension needs Pizza Soup Grow the category Build sales in a growth market Bread & Sweet rolls Range improvement Range improvement 9

Accessing New Channels To Market

New Channels to Market Wholesaling: • Extending brand reach • Entered „bake at home‟ market in Oct 2011, now in 746 Iceland stores • Opportunity beyond Iceland and for International • Trial to supply British forces through NAAFI in 1 German military base • Potential to roll out worldwide to 24 military bases • Kelso chutney, sauces & soup manufacturing Franchising: • 4 franchise shops opened with Moto on motorway services • Commitment to open another 26 11

Investing in shops

Investing in new shops Accelerated rate of net openings: 2008 2009 2010 2011 2012 41 10 68 84 c.100 • Structure of estate changing to meet changing lifestyles: - half of openings away from high streets - focus on workplaces, travel & leisure - 20% of estate now away from traditional high streets • New shops performing well • Target 20% return on shop capital to ensure LT supply chain costs recovered • Maturity in 2-3 years depending on brand awareness 13

Developing three shop formats Food on the go Local bakery Coffee shop • • • 260 in latest format One in latest format! New market opportunity • • • c.1200 of existing c.400 of existing locations 5 completed to date • locations are FOTG are local bakery 3 further shops in Q1 2013 • • • Continuing to roll out Ten more this year Evaluate potential for roll- • through refits and range Roll out over 3-4 years out • extension Accelerate range roll out Focus on investing in formats and range to drive LFL in core estate Investment criteria ensure minimum ROC of 12% on conversions 14

Delivering competitive advantage through Supply Chain

Supply Chain savings running ahead of plan Progress to date: Increased target £m 12 now £15m • Closed two old less efficient 10 bakeries • New state-of-the-art bakery 8 £6.8m in Newcastle 6 • New specialist confectionery bakery in Penrith 4 • Investment in automation 2 £1.4m • Increasing number of shops supplied per bakery 0 2010 2011 2012 2013 2014 Looking forward: Actual Plan • Maximise existing capacity • Further consolidation of production of key lines • Truck fleet efficiencies though telematics • Selective bakery extensions • Wiltshire bakery to support expansion in South and SW in next 2-3 years 16

Investing in further savoury capacity 2011 2014 2010 2012 2013 2015 2016 BALLIOL CAPACITY Original Capacity A 2009 Assumption Line Upgrade and B 2010 efficiency improvements C 2012 / Further upgrades to line 2013 throughput capacity D 2011 / Development of Iceland 2012 Wholesale business • Successful growth in new channels bringing forward existing plans • £30M to £35M investment for two line factory in south • Commence build in 2013, operational by H2 2014 • New growth and reduced logistics costs expected to deliver 14% IRR 17

Living Greggs Values through our People and the Community

Our Values “We will be enthusiastic and supportive in all that we do, open, honest and appreciative, treating everyone with fairness, consideration and respect” • 10% of profits shared with our people • Consistency of leadership • Low labour turnover • 75-80% of shop managers promoted from within • Investment in our “Brilliant Shop Manager” programme 19

Supporting the most disadvantaged in our communities • £3.25m raised since 2006 • 200 breakfast clubs feeding 10,000 children • £20m raised and donated over 25 years • Every manager given 1 day paid leave to volunteer in their local community 20

Our strategy to grow the Greggs Brand Based on 5 key pillars: • Meeting evolving consumer needs • Investing in shops • Accessing new markets • Delivering competitive advantage through our supply chain • Living Greggs values through our people and our communities 21

Q & A 22