Greggs’s Northern Ireland move backed by analyst
The Newcastle-based business has confirmed plans to open its first store in Northern Ireland at the end of this month in partnership with Applegreen. The company runs petrol forecourts and motorway services in the UK and the US.
Shore Capital director of research Clive Black, who described the move as “another geographic string to its bow”, said: “We see partnership with Applegreen as a low risk and capital light venture by Greggs into a market where there could be good medium-term expansion potential given the nature of its proposition.”
The store will be incorporated into Northern Ireland’s first motorway service station, which is a new build developed by Applegreen on the northbound M2, between Glengormley and Templepatrick. This is one of several developments the group was working on in the region.
‘High quality players’
Black welcomed the move by what he called “two high quality players in the food-to-go market”.
“Greggs has been on a great roll, no pun intended, for some time under the tutelage of ceo Roger Whiteside, for which we give him enormous credit,” he said. “He has refocused the business and given it considerable energy and relevance, an achievement that we really did not foresee in its pace and extent.
“An improved offer from an upgraded estate, embracing more seating, is driving same store sales. Greggs now has positive core volumes, which is leading to the highly virtuous outcome of positive operational gearing across both its store estate and manufacturing facilities.
‘Stars aligned’
“The commercial stars are arguably perfectly aligned for Greggs at this time with rising real incomes in the UK supporting demand and materially lower input costs further assisting the group’s margins.”
Black encouraged investors to buy into Greggs’s shares off the back of its current performance. “We see Northern Ireland as an interesting new market where we shall watch to see if Greggs’s proposition is in synchronisation with the local palate of Northern Ireland folk. We sense it may be given Greggs’s long-standing success in Scotland and the cities of Northern England.
“Shore Capital welcomes this measured expansion by Greggs into a new potentially complementary territory and we shall watch with interest to see the progress of this store and any further tie-ups that may occur with Applegreen.”
In a statement on its tie-up with Applegreen, Greggs said: “Greggs is excited to be trialling a test site with the Irish motorway service station operator Applegreen, at a service area located on the M2 in Belfast. The trial, which is due to start at the end of April and run for a 12-month period, will enable Greggs to assess Northern Ireland’s appetite for its ‘Always Fresh. Always Tasty’ customer offer.”
