Greggs - investors

	1. What are your key strategic principles? Our aim is to be recognised as Europe's finest bakery-related retailer, by achieving excellence in everything we do. In particular, we seek to: - provide our customers with enjoyable, tasty, value-for-money products - continuously improve the quality of our shops and service - raise awareness of our brands - achieve simplicity in all areas of our business, as the key to improving the productivity of our assets and our people. As a customer-focused business with over 19,000 staff, most of them directly involved in serving the public - our approach to people is central to everything we do. The culture of the business is to: - treat all employees with consideration - foster a working environment that combines autonomy with accountability - ensure that people enjoy their work - maintain our focus on excellent service and profitability.
	2. How many shops do you have? We currently have over 1,350 retail outlets.
	3. Do all your shops trade as Greggs? We have two brands: Greggs and Bakers Oven. Over 1,200 of our shops are in our eight Greggs divisions. The remainder are in our two Bakers Oven divisions.
	4. Why do you have two different brands? When we acquired Bakers Oven in 1994, we decided to retain and develop it as an alternate brand. A substantial number of smaller Bakers Oven shops, which were unsuitable for this positioning, were converted to the Greggs fascia.
	5. How do Bakers Oven shops differ from Greggs? The vast majority of Bakers Oven stores have seated catering facilities and / or in-store bakeries. Greggs shops are served by central bakeries, with a range of products baked off in ovens in the stores.
	6. What are your biggest selling lines? Around two-thirds of our business is in takeaway food principally sandwiches and savoury products like pasties and sausage rolls, plus sweet lines like doughnuts and drinks. These product categories have driven the growth of the group for many years. We also sell traditional bakery lines like bread and rolls.
	7. Do you make products for anyone else? No, our 11 bakeries only supply our own shops. We manufacture all the main bakery product lines we sell, buying in only a few lines such as crisps and drinks.
	8. Is there much scope for innovation in your business? Yes – we are constantly developing new products and upgrading established lines to make them even tastier and more enjoyable. In 1998 we opened a £9 million central savouries unit at Balliol Park, Newcastle upon Tyne, which has helped to drive growth in this product category by producing high quality, consistent products at a very low unit cost. Our capacity to innovate was significantly enhanced by the opening in 2001 of a new group technical centre next to the savouries plant. This provides us with much improved facilities to develop and test both new products and improved shop layouts and working methods. It will also help us to ensure that every division attains the highest standards, by identifying and establishing best practice throughout the group.
	9. Who are your main competitors? We compete with everyone who sells bakery products and takeaway food – from the major supermarkets to independent bakers and fast food outlets. We are the UK’s leading specialist retailer of bakery-related products and we believe that the freshness, value and sheer enjoyability of our products give us an important competitive edge.
	10. How do you compete with the supermarkets? We recognised many years ago that the supermarkets were likely to take an increasing share of the market in bread and rolls, which is why we repositioned ourselves to become primarily a takeaway food business. Here our convenient locations, in the high streets and suburbs where people live and work, give us a real competitive advantage. All our sandwiches are freshly made in our stores each day, with bread from the local Greggs bakery delivered fresh in the mornings or baked on the premises. We aim to offer outstanding value for money on all our products.
	11. Is there any seasonal bias in your business? Sales are spread relatively evenly, but we make more profit in the second half than the first. This reflects the fact that the ‘first half’ is in fact only 24 weeks, and that there are more Bank Holidays in this period when our shops do not trade. In addition, wages and other fixed costs tend to increase in January and are recovered gradually through the year.
	12. Does the weather affect your business? We are affected only by climatic extremes – very hot weather can depress demand for bakery products, and prolonged rain or snow can make people reluctant to go out and make their usual daily purchases.
	13. How much scope for expansion do you have in the UK? We believe that there is potential to grow to at least 1,700 - 2000 shops, both by expansion within existing trading areas where we are under-represented, such as the South East, and by moving into new regions. The markets in which we operate are large, fragmented and growing. We are the largest specialist retailer of sandwiches.
	14. Will you seek to grow by acquisition? In the past we have acquired established regional businesses as a platform for development in new trading areas. However, our growing emphasis on our two core brands – and the cost of re-branding any future acquisitions – makes organic, greenfield expansion a more attractive route.
	15. Do you have any plans for expansion outside the UK? Although we believe that there is plenty of scope for growth in the UK, we believe that there is potential for our trading format in Continental Europe and our first trial store in Belguim opened in February 2003.
	16. Do you see any potential for e-commerce in your business? Not in serving customers directly, though we are rolling out a touch-screen Electronic Point of Sale (EPoS) system that is providing us with much improved business information through the Internet. We also believe that we can significantly improve our interaction with our suppliers by the use of e-commerce.
	17. What are the key financial characteristics of the business? We generate a very strong cash flow which enables us to fund investment in our shops, bakeries, brands and central services from our own resources.
	18. What is your dividend policy? We are committed to a progressive dividend policy that provides our shareholders with increases in their income broadly in line with the growth of earnings per share over the medium term.