Advertisement

Greggs warns of job cuts ahead as furlough winds up

Greggs
Greggs

Greggs is fighting to limit job cuts as the taxpayer-funded furlough scheme comes to an end, forcing the hospitality industry into a massive wave of redundancies.

The bakery has launched a consultation with unions and staff over cutting workers' hours to avoid a major round of redundancies.

Bosses said they have no choice but to act as Greggs prepares for the Government's Job Retention Scheme to finish at the end of October. A host of other companies are expected to start similar consultations in comping days as they prepare for  the subsidy to be withdrawn, with experts warning a million jobs could be lost.

In the past few weeks, Greggs' sales have recovered to three-quarters of their prior levels. It said trading had improved slightly in September following a more challenging month in August.

But the FTSE 250 retailer warned that demand in its shops will remain below normal levels for the foreseeable future.

It added: "We must change the way we work to be as productive and flexible as we can in order to protect as many jobs as possible for the long term."

What are the rules on making people redundant?
What are the rules on making people redundant?

Warmer weather also hit demand for Greggs' products during August, while it was unable to participate in the Chancellor's Eat Out to Help Out discount dining scheme because its seating areas remained closed.

Greggs has long been a British success story, with millions of customers eating its meat and vegan sausage rolls and other on-the-go food.

Chief executive Roger Whiteside has been in charge of a turnaround of the bakery chain since he took over  in 2013. He presided over a fourfold rise in the firms share price before the pandemic struck - but since mid-January, the stock has crashed 54pc as workers stay at home and the economy is crippled by Boris Johnson's restrictions on freedom.

Greggs has now restarted the opening of new stores, which it hopes will keep redundancies to a minimum. It has shut 49 shops so far this year and opened 38 fresh sites, giving the company a total of 2,039 stores. It has now opened seating areas in 100 of its shops with social distancing measures in place and is bringing back more items to its range.

Markets Hub - Greggs PLC
Markets Hub - Greggs PLC

The company has also been seeking to break into the online ordering and delivery market. It rolled out click and collect nationwide over the summer, while a partnership with Just Eat accounted for 2.6pc of sales in recent weeks.

Greggs warned its distribution and stock availability could be hampered by localised coronavirus outbreaks. There have been two outbreaks in the last two months at Greggs facilities. A number of staff tested positive at its depot in Bramley last week, and a similar outbreak in North Tyneside halted production earlier this week.

Analysts at UBS said: "While the outlook remains uncertain and with normal trading ultimately dependent on a recovery in footfall, we believe positive progress with delivery, click and collect, store openings, and range availability should be supportive."

Gregg shares fell 6.6pc in noon trading to £11.38.