Greggs drive to expand at petrol stations

Jul 27 2009 by Andrew Mernin, The Journal

BAKERY chain Greggs has revealed its first move on to the petrol forecourt as it continues to target locations away from the high street.

The Newcastle plc has signed a deal with Euro Garages, which has 76 forecourts across the UK, and has opened its first store at the firm’s newly developed site in Bury, Lancashire, with others set to follow.

The opening follows Greggs’ recent expansion into industrial estates and retail parks in a drive to take the brand to where customers are.

Euro Garages, which was formed eight years ago by brothers Mohsin and Zuber Issa with a single petrol station, is the UK’s fastest-growing forecourt operator and the second largest independent in the sector. It sells about 300 million litres of fuel each year and has a turnover of £260m.

It has grown by acquiring and redeveloping run-down petrol stations, partnering with brands such as Spar to offer convenience retail stores and Subway to provide franchised fast food outlets on the same sites.

Mike Kavanagh, retail development manager at Greggs, said there was room for significant growth in the petrol forecourt retail sector.

He said: “If this move is as successful as we anticipate, we plan to extend the model to other regions.”

As the economic downturn has rumbled on, Greggs has been one of the few large firms in the North East to prosper as cash-strapped customers look for better value on food and drink.

Earlier this year the company outlined coffee and muffins, which are priced considerably lower than many of its high street rivals, as an area of growth while its 99p sandwich range has also proved popular.

The plc’s 2008 results showed a 4.4% rise in like-for-like sales with pre-tax profits falling 3.3% to £45.2m in a period which saw 41 new outlets opened.

Meanwhile, total sales in the 19 weeks to 9 May this year increased by 5.2%, including like-for-like sales growth of 2.0%.

Next year the company plans to embark on a major expansion drive as bids to take its stable of 1,400 stores in the UK beyond the 2,000 mark.

With no stores in Devon or Cornwall this is a priority geographical area and the company is also targeting openings in locations where people travel or work, such as railway stations and industrial estates.