Greggs
Greggs plc is the UK’s leading retailer that specialises in sandwiches, savouries and other bakery related products, with a particular focus upon takeaway food and catering.
With over 1,200 shops in the UK, the business trades using two retail brands - Greggs and Bakers Oven.
The marketing mix of the bakery product range focuses on providing customers with "great taste", with an emphasis on product freshness, quality and outstanding value for money.
The marketing mix of the bakery product range focuses on providing customers with "great taste", with an emphasis on product freshness, quality and outstanding value for money.
At the end of 2008 Greggs had capital employed of £148m. In 2008, Greggs made a net profit of £48m on sales of £628m which were 7% up on 2007. However, net profit declined by 7% in 2008 due to substantial increases in the cost of food raw materials.
Greggs decided not to pass these cost increases onto consumers since the demand for takeaway food is very sensitive to changes in price.
Greggs decided not to pass these cost increases onto consumers since the demand for takeaway food is very sensitive to changes in price.
The Greggs business has a divisional structure with central bakeries around the country each supplying the shops in their surrounding areas.
The business employs around 19,000 people in a range of jobs, including shop staff, drivers, bakery staff, savoury production, finance, personnel, purchasing and IT.
Complex retail IT systems help Greggs management monitor store and product performance, manage cash flows from the tills and deal directly with ingredient and other key suppliers.
The business employs around 19,000 people in a range of jobs, including shop staff, drivers, bakery staff, savoury production, finance, personnel, purchasing and IT.
Complex retail IT systems help Greggs management monitor store and product performance, manage cash flows from the tills and deal directly with ingredient and other key suppliers.
One of the founding principles of Greggs is that the business put people first. Greggs are passionate in their belief that if the business treats its people correctly, they will treat customers with similar consideration.
As well as giving staff an enjoyable place to work with good career prospects, Greggs also look to fairly reward all its employees. A number of pay schemes and fringe benefits are on offer including:
As well as giving staff an enjoyable place to work with good career prospects, Greggs also look to fairly reward all its employees. A number of pay schemes and fringe benefits are on offer including:
Competitive rates of pay
Profit share
Staff discount
Free group life assurance
Pension scheme
Extra holiday entitlement for long service
In terms of competition, Greggs competes with everyone who sells bakery products and takeaway food – from the major supermarkets to independent bakers and fast food outlets.
Although the market is well served, Greggs believes that there is significant potential for expansion in the UK, with the potential to grow to over 2,000 stores on the UK Mainland, both by expansion within existing trading areas where the business is under-represented and by moving into new regions.
The markets in which Greggs operates are large, fragmented and growing. Even though it is the market leader, Gregg's national market share is only around 2.5%.
The markets in which Greggs operates are large, fragmented and growing. Even though it is the market leader, Gregg's national market share is only around 2.5%.
Using the data in the case study, calculate:
(i) Greggs sales in 2007
(ii) The return on capital employed in 2008
(iii) The net profit margin in 2008
(iii) The net profit margin in 2008
