Buy healthier, savvier Greggs

Some of the most important adjustments at Greggs over recent years have emerged from the ongoing estate management programme. Stores across the estate have been refreshed, relocated and modernised. Greggs refurbished 55 stores in the first 18 weeks of 2016 and is opening more new stores than it is closing (122 opened versus 74 closed in 2015). Its estate now numbers more than 1,700 outlets. This year it expects to open 100-120 shops, and to close 50-60.

The estate is also moving away from the UK's troubled high streets, with 27 per cent of sites off-high-street at the end of 2015 compared with 20 per cent two years earlier. New openings have targeted travel hubs, such as railway stations, petrol forecourts and motorway service stations, with many taking on either the new 'food-on-the-go' or 'Bakery food-on-the-go' format.

The product range has undergone significant changes in recent years, too. Greggs now prides itself on leading the value end of the food-to-go market thanks to its fit-to-bursting range, which includes everything from breakfast, coffee, traditional pasties and sausage rolls to healthier soft drinks and takeaway boxed salads.

Aside from the stores and the product range, management has been cutting costs, with £12m of savings last year. The next major leg in efficiency improvement will focus on the supply chain. As part of a £100m five-year investment programme three bakeries are slated to close - Twickenham, Edinburgh and a micro-bakery in Sleaford - and disposal proceeds will go towards the investment in "manufacturing centres of excellence" in Enfield and Glasgow, which will support further estate growth. While the group has net cash, management is keen to keep this at about £40m to service the business's working capital needs and to balance out its substantial rent commitments. Rent cost Greggs £46m last year and the group ended the year with off-balance-sheet lease obligations totalling £128m - new accounting rules mean these liabilities will soon be brought on to the balance sheet.

In terms of staffing, there had been concerns that the introduction of the new national living wage (NLW) would drive costs even higher at Greggs. However, management has said it expects the timing of the new legislation to have a potential benefit, particularly in the first half of the financial year. Greggs already instigated a 5 per cent wage award in April, taking the hourly rate of its shop staff to £7.47.