By Elizabeth Grey, Writer and Editor
This time last year high street bakery chain Greggs was mired in financial turmoil. A 2.9 % fall in year-on-year sales was costing the company £4.6 million and wiping 7% off the value of their shares. For a while it looked like Greggs was going to join the likes of Woolworths, HMV, Blockbuster and Comet in the list of high street casualties.
Yet today the picture couldn’t be more different. Greggs put in place an ambitious rescue programme which is driving a remarkable 48% increase in year-on-year profits in the first six months of this financial year. And this is despite a flattening effect as a result of last year’s disappointing figures.
Analysing how Greggs turned the business around offers business owners and managers a blueprint for not just how to revive a struggling business, but how to avoid getting into that position in the first place.
Review weak spots and eliminate them
One of the first actions Greggs took was to eliminate parts of their business that were dragging overall performance down. Stores in ‘failing catchments’ were identified and closed, along with their fledgling coffee venture.
This is one reason why it’s vital to keep an eagle eye on your accounting, rather than leaving preparing your books until the end of the year. Seeing which areas of the business aren’t pulling their weight, or even losing money, means that steps can be taken before one or two problematic areas threaten the entire enterprise.
There are some times when it makes no financial sense to operate a product or area of business which isn’t pulling its weight, but this doesn’t need to be limited to closing down unprofitable areas.
Staff turnover costs British businesses £4.13bn every year. Recruitment and training could be leaving a big dent in profits, as well as contributing to overwork and stress among existing team members, making them more likely to leave and the problem to grow.
There may be other underperforming business activities to slash. Without monitoring and assessing the ROI from marketing efforts businesses risk wasting thousands of pounds on campaigns which can’t justify their own price tag.
Keep up with customers
When you think about Greggs what comes to mind? Chances are its sausage rolls, pasties and sticky buns. Despite the continual onslaught of headlines about the rise of obesity in the UK[//nurl] research shows that British eating habits are [nurl=http://www.thegrocer.co.uk/stores/consumer-trends/waitrose-report-finds-thrifty-brits-still-curious-about-food/372795.article]actually becoming healthier. In particular, there’s a move away from protein and a new desire for vegetables in products.
Greggs realised that they were being left behind in this trend and introduced a range of healthier sandwiches, with fewer calories and less salt and sugar. This winter they will introduce fresh soup and hot sandwiches to capitalise further on this trend.
This just shows how necessary it is for business owners to keep abreast of their customers’ changing tastes and habits. A restaurant or café might ensure that the latest culinary sensation makes an appearance on their menu or get rid of the favourite from 2010. A b2b provider might keep up-to-date with changes in their customer’s business sectors, so that they can tailor their services to the needs they have right now, not five years ago.
Analyse and optimise user experience
Another prong of Greggs’ turnaround is refurbishing some of their stores to a higher standard and adding more seats, making their bakeries a more pleasant place for customers to spend their money.
As well as reviewing financials, businesses should consider whether buying from or interacting with the business is a pleasant experience for customers or one which leaves them frustrated or frazzled. One of the best ways to do this is to ask customers for feedback directly, perhaps using a survey or feedback forms with a prize incentive.
Google Analytics can be used to track user’s path journey through a website, allowing businesses to work out which regions of the website are performing and assisting in sales or enquiries.
Take advantage of external events
Another factor which Greggs’ management are crediting for their upturn in profits is this summer’s good weather. Sunshine and warmth made eating outside, grabbing a sandwich or pasty from the bakery an attractive option.
It’s unfortunate that businesses can’t pre-order the type of weather conditions they need, but they can capitalise on external events such as the weather, holidays and sporting and local events. Many businesses will already see improved performance around particular seasons or annual events, it’s important to think practically on how to capitalise on these events more effectively each time.