Greggs to Boost Production with Major Expansion in the Midlands
In a strategic move to enhance its production and logistics capabilities, high street bakery giant Greggs has unveiled plans for significant expansion in the Midlands. The company has entered into a lease agreement for a site at SmartParc SEGRO Derby, where a new facility will be constructed to address its growing manufacturing demands.
This initiative is part of Greggs’ broader strategy to scale its operations and support its expanding logistics network.
Construction of the new Derby facility is already underway, with the first phase of manufacturing and logistics equipment scheduled for installation throughout 2025 and 2026. The project involves a substantial self-funded capital expenditure, complemented by a leased right-of-use asset valued at approximately £65 million, to be recognised upon the lease commencement.
What’s more, this new site will play a crucial role in meeting the increasing demand for Greggs’ popular products, including its iconic sausage rolls and bakes.
In addition to the Derby site, Greggs is in advanced negotiations to purchase land in the Corby/Kettering area. This site is earmarked for the development of a national distribution centre focused on both chilled and ambient goods.
The contract exchange for the land purchase is anticipated within the coming months. This expansion aims to bolster Greggs’ logistics capacity, enabling the support of an additional 1,000 shops, thereby extending its network to approximately 3,500 stores.
What’s even more impressive,the new facility will feature semi-automated storage and picking solutions, further enhancing operational efficiency and reducing lead times for store deliveries.
The company’s latest trading update highlights its adherence to previously outlined capital expenditure plans. This includes investments in the Birmingham and Amesbury distribution centres, expected to deliver additional logistics capacity by the end of 2024.
Moreover, Greggs has successfully commissioned a fourth production line for its sausage rolls and bakes at Balliol Park in Newcastle, projected to increase production capacity at the site by 35% over time. This expansion is anticipated to create numerous job opportunities, contributing positively to the local economy.
Greggs continues to show robust growth, having recently opened its 2,500th store at a Sainsbury’s petrol forecourt in Cobham.
In the first 19 weeks of 2024 alone, the company saw 64 gross new shop openings and 27 net openings, contributing to a 7.4% increase in like-for-like sales. Total sales for the period amounted to an impressive £693 million, reflecting strong consumer demand and effective business strategies.
The expansion comes at a time when Greggs is also focusing on enhancing its customer experience through various initiatives. These include the introduction of new menu items, the rollout of digital ordering options, and the continued development of its loyalty program, which has seen increased engagement from customers.
Additionally, Greggs is exploring sustainable practices within its operations, such as reducing food waste and increasing the use of renewable energy sources at its facilities.
To conclude, this expansion marks a pivotal chapter in Greggs’ growth story, reflecting its commitment to meeting rising demand and enhancing its supply chain capabilities. As the company moves forward with these ambitious projects, it stands well-positioned to continue its trajectory of success in the competitive bakery market.
With its focus on innovation, customer satisfaction, and sustainability, Greggs is set to maintain its leadership in the industry and deliver value to its shareholders and customers alike.
News Credits: Greggs to expand production with two new sites
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