Ken McMeikan, CEO of Greggs since 2008, has announced his intention to step down from the company after being snapped up by Brakes. McMeikan will remain in situ until a successor can be found. ‘It has been a great honour to lead Greggs since 2008,’ his statement reads. ‘It is a wonderful company with fantastic people and I am enormously proud of all that we have achieved together.’
This is no half-baked decision. This latest move will place him at the helm of one of the largest suppliers to the catering industry in the UK and France, employing over 10,000 staff. Brakes is backed by Bain Capital – the company founded by presidential candidate Mitt Romney in 2007.
Greggs has been fortunate to hang on to McMeikan for as long as it did. He’s one of food retail’s rolling stones, working for Tesco in Japan for a short stint before spending a while as retail director at Sainsbury’s. In his four years at Greggs, McMeikan has completely turned around the business, creating a fast-growing national chain – rather than a few disparate bakery outposts. Stores have been revamped to reveal a ‘theatre of bakery’, thrilling queuing shoppers with the welcoming whiffs of baking tarts.
He has also pioneered the firm’s wholesale business, which sees Greggs ‘Bake at home’ products sold at Iceland. Most famously, he also helped to defeat the Coalition’s ill-fated ‘pasty tax’. He’s like the puff pastry that just won’t stop rising...
He’s chosen a rather sticky time to step down, however: sales at Greggs have slowed in the latter half of the year due to depressed trading conditions. And the markets are clearly alarmed by his departure: Greggs shares slipped 3pc to 472.4p in early trading. But the company has been quick to react with a statement assuring investors that there are no updates to Gregg’s trading trajectory.
As a supplier to the catering industry, Brakes will be facing similar market pressures in the months ahead. Its lucrative contract with the Olympics has come to an end and its last available financial statement to the six months to June 2012 references an increase in EDITDA rather that profit, suggesting earnings sagging like an under-stuffed pasty.
But the key difference between Greggs and Brakes is that the latter is a wholesale operation. McMeikan is a man who has spent his career till now in retail. Now, he has decided that he can't take the heat and is getting out of the bakery. Hardly a vote of confidence in the high street...