Greggs is pressing ahead with plans to reopen 800 stores on Thursday but has said it expects sales to be lower than normal for some time, prompting the bakery chain to suspend plans to open new stores and seek rent reductions from its landlords.
The Newcastle-based chain, which has 2,050 shops, is planning to reopen the remainder of its stores in early July, with Covid-19 safety measures in place such as protective screens at its counters and markings to help ensure customers maintain physical distancing.
“We are not able to predict the impact of social distancing on our ability to trade or on customer demand,” Greggs said in a market update on Tuesday. “However, our capacity to operate will be restricted by size of shop and we must anticipate that sales may be lower than normal for some time.”
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The bakery, which usually sells about 1.5m sausage rolls a week and last year successfully launched a vegan alternative, said it had informed all of its landlords that it would be moving to monthly rather than quarterly rental payment and was making a “variety of proposals” in return for rent reductions.
A “proportion” of Greggs’ 25,000 staff will remain on full or partial furlough until sales levels “begin to return to normal”, the company said.
That will include workers at its manufacturing sites, as Greggs continues to limit its food range to the bakery’s best-selling items. “Therefore a number of our manufacturing operational teams will remain furloughed until demand reaches a level that justifies the addition of remaining product lines,” Greggs said.
The company is also suspending plans for new shop openings but said it would follow through with about 60 new stores, due in part to legal commitments. About 50 other stores will close by year-end. Greggs had previously been targeting 100 store openings, on a net basis, per year.
Around 800 Greggs shops are set to reopen to takeaway customers on Thursday, after the UK government allowed non-essential stores in England to reopen for the first time in three months. About 19 stores will offer delivery as well as click and collect services.
The move follows the reopening of a handful of branches in the north-east last month.
The Greggs chief executive, Roger Whiteside, said: “Looking forward, although great uncertainty remains, we are excited to be resuming our service for many customers this week. We are confident of our ability to adapt to market conditions in the short term while continuing to invest in the long-term growth of our business.”
Greggs’ shares rose by 5%.
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