|


|
Mon 28th Jul 2025 - Update: Gail’s, Greggs and Everyman Group |
|
Gail’s CEO – the smartest businesses know when to pause but we’re nowhere near saturation point, had thoughts about international expansion but still a long way to go in the UK: Gail’s chief executive Tom Molnar has said while “the smartest businesses know when to pause”, it is “nowhere near saturation point”. He added that while he has had thoughts about international expansion, there is still a long way for the brand to go in the UK. Molnar was speaking to The Times about the expansion of the bakery business, which has grown to 175 shops in the past 20 years and estimates it will pass the 200-mark this year with up to 35 more openings. “Like you, I am part of society; I know where there are issues about chain versus non-chain,” he said. “But there are good chains and there are bad chains and there is good independence and bad independence. But as individuals, we are much more sophisticated than saying it’s just this or just that. I’ve shut down growth three times in the past 20 years. We were driving a bit too fast and thought why would we ruin this thing? The system is always there to push you, but I think the smartest businesses know when to pause.” While Gail’s is very much focused on the UK right now, Molnar said he has thought about taking the chain international for years but “hasn’t pulled the trigger” because there is still such a long way to go in the UK. It would take an enormous effort, given how deep-rooted its UK supply chain is, he explains. “I would need to make sure the food and the network is there, which I’m sure it is,” he said. Revenues at Grain Topco, the parent company of Gail’s Bakery and The Bread Factory – a its wholesale division set up in the early 1990s to supply the likes of Gordon Ramsay’s restaurants and other high-end eateries in the capital – rose to £231.8m in the year ending February 2024, up from £181.8m the previous year. It attributed its performance to “steady growth” in its established locations and the opening of a further 21 bakeries. Molnar reckons Gail’s “is so far away” from its saturation point, saying it’s “all subject to two things”. First, he said the wellness trend that has powered Gail’s growth shows little sign of abating, as consumers become increasingly sophisticated about ingredients, provenance and production methods. Second, Molnar said he is honest about the financial realities of the business. “We have to find inexpensive real estate,” he said. “We are not the place that pays high rent; we can’t – we don’t have the margin. We invest a lot of money into our shops, so we can’t pay high rents. Luckily, in a lot of cases, landlords will help us. If there is competition for a site, I often say, ‘Let’s forget it. It’s not important enough. I’ll find another site’.” To remain successful, Molnar is aware he needs to manage Gail’s next phase of expansion carefully. Its growth was accelerated in 2011 when Risk Capital Partners bought out co-founder Gail Mejia. Risk ceded control of a majority stake a decade later to Bain Capital Credit for £200m. Molnar is very particular about how he describes Gail’s relationship with its investors. “We are private equity supported, not private equity backed,” he said. “They’re your wing person. I tell them my plan, and they decide whether they want to invest or not.” Recent reports sugges the business could command a £500m valuation in a potential sale. “There is always a lot of interest in this business, but serious interest takes time to nurture,” Molnar added. “They have to know what our mission and our purpose is, otherwise, why would you invest? We’re not selling, they are investing.”
Premium Club subscribers to receive updated New Openings Database and videos from Operational Excellence Conference this week: The next Propel New Openings Database will be sent to Premium Club subscribers on Friday (1 August), at 12pm. The database will show the details of 157 site openings, including which company has opened a site or its plans to open one in the future. The database will have details on what type of site it is and its location, and there will also be a website link to the businesses. The database is published on a monthly basis and Premium Club subscribers will also receive a 9,157-word report on the 157 new additions to the database. The database includes new openings in the casual dining sector such as north west Middle Eastern-inspired restaurant and cocktail bar concept Maray opening in Chester, London restaurateur Ninai Zarach launching Campanelle, an all-day restaurant centred around the rich history and culinary heritage of Italy, and Kervan Sofrasi, the London Turkish concept opening in Muswell Hill. Premium Club subscribers will also receive all the videos from the Operational Excellence Conference on Friday, at 9am. They include Ed Devenport, who entered the sector in 2016 and has turned Incipio into one of the UK’s most innovative and varied pub, restaurant and event space operators, talking about the ten key operations lessons he has learned. Premium Club subscribers also receive access to five other databases: the Turnover & Profits Blue Book, the Multi-site Database, the UK Food and Beverage Franchisor Database, the UK Food and Beverage Franchisee Database and the Who's Who of UK Hospitality. All Premium Club subscribers will be offered a 20% discount on tickets to Propel paid-for events and discounts on specialist sector reports. Operators that are Premium Club subscribers are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club subscribers receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club subscribers also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.
Investors question whether the UK has ‘hit peak Greggs’: Investors are questioning whether the UK has “hit peak Greggs”, reports The Times. This month, Greggs warned that full-year operating profits could be “modestly below” last year, blaming the UK’s early-summer heatwave, which the company said hit footfall at its 2,649 outlets. The slowdown in sales comes after Greggs has invested hundreds of millions of pounds in its expansion plans, the newspaper said. It opened 145 net new outlets last year and plans a similar number this year, targeting locations including the south of England, where it believes it is under-represented, as well as airports, train stations and supermarkets. “Their expansion plans have been so aggressive, there are just too many [outlets]. I think people feel they have stuffed themselves with enough Greggs for the time being,” said one institutional investor who recently sold their stake in the company. “Greggs had a very intense moment of popularity but now they [are going] through a hangover from that. [We have] reached peak Greggs, and once that idea escapes into the market you, have a problem.” Greggs declined to comment. At the company’s interim results this week, investors will want to see evidence of good trading outside the exceptionally hot weeks to give them confidence that the chain’s recent problems are temporary, according to Shore Capital analyst Darren Shirley. “[Greggs] is in a tough position,” he added. “The excitement is over.” The company plans to increase its number of outlets from 2,649 to more than 3,000, even though about one in five of them is within 500 metres of another one. “Every way you cut the numbers, we know that actually we could have significantly more than 3,500 shops across the UK,” chief executive Roisin Currie told the Financial Times in May. One adviser to consumer companies said 2,000 stores was “the sweet spot” for Greggs, arguing it should focus on improving its “ageing estate” and simplifying its menu rather than opening more outlets. Jules Hull, founder of Dragoneye Research, said that while consumers loved its sausage rolls and other baked goods, Greggs began to lose its way “the moment it tried to be all things to all people”. Hull cited the additional cost and complexity of initiatives such as customised sandwiches and pizza slices. In March, short sellers began betting against Greggs’ shares. The percentage of its shares out on loan, a proxy for short selling, has increased from 0.3% to 6.3% over the past five months, the highest level for a decade, data from S&P Global shows. “This company has been doing well for a long period of time, but it is selling its products for a low price, so things get tough during inflationary periods,” one top 20 shareholder told The Times. “Greggs is being squeezed. It should slow its expansion.” The company has pushed some of its higher costs on to consumers, notably by increasing the price of sausage rolls, its signature product, by 30% to £1.30 over the past four years. Aberdeen portfolio manager Wes McCoy is among those betting the company is experiencing little more than a bump in the road. He took advantage of the nearly 40% decline in its share price this year to enter the stock. McCoy described Greggs as “a serious, well focused, well-run machine” and advised investors not to mistake current trading, which he puts down to extreme weather, with “the future [prospects] of this business”. Another former investor said that as long as Greggs is delivering like-for-like sales growth of 3-4% it would be enough to justify its investment in expansion, adding that at current levels the shares were “a bargain”. However, Peel Hunt analyst John Stevenson added: “Greggs has been a phenomenal UK success story, and it has gone through a period of uber-growth – but peak Greggs is gone.” Everyman set to hit 50-site mark next year as it reports admissions up 15% on first half of 2024: Everyman, the independent, premium cinema group, has said it is set to hit the 50-site mark next year as it reports admissions are up 15% on the first half of 2024. Everyman now operates 48 cinemas, following the opening of a three-screen venue in Brentford in March. A five-screen venue at The Whiteley in Bayswater is due to open in August, and while no further openings are planned in 2025, the group plans to open two additional venues in 2026, “with a strong pipeline of future developments also in place”. For the 26 weeks ending 3 July 2025, the company reported admissions of 2.2m, up 15% on 1.9m in the first half of 2024. Group revenue of £56.5m was up 21% (H1 2024: £46.9m) and group Ebitda of £8.2m was up 33% (H1 2024: £6.2m). Paid-for average ticket price was £12.46 (H1 2024: £11.76), up 6.0%, and food and beverage spend per head was £11.09 (H1 2024: £10.47), up 5.9%. The company’s market share was 5.8% (H1 2024: 5.6%), up 3.6%, while net debt of £24.2m (H1 2024: £25.8m) was down 6.2%, with net debt repayment from operational cash flow expected in the second half of 2025. The company said in what is a “challenging economic environment”, it is “currently trading in line with board expectations for the full financial year”. Chief executive Alex Scrimgeour said: “Our performance in the first half reflects the successful execution of our strategy, with growth across all key metrics and ongoing delivery of our measured expansion programme. This is driven by Everyman's unique brand of high-quality, experience-led cinema. We look forward to building on this momentum in the second half of the year.”
|
|
|
|
|
|
|