Job cuts loom at Greggs as end of furlough scheme nears

High street bakery chain Greggs has warned that jobs are at risk across its stores when the furlough scheme ends next month.

The Newcastle-based business has said it is in talks with staff over cutting employee hours “to minimise the risk of job losses” when the job retention scheme comes to an end.

However, chief executive Roger Whiteside said there is “no chance” the firm will be able to sufficiently reduce staff hours to avoid the need for redundancies completely.

He also said that “about 50%” of stores have staffing levels which are too high for current customer demand when financial support from the Government scheme dries up.

“Some stores have staff hours which are just off what’s needed for current demand, but others are a long way off and will need significant change,” Mr Whiteside told reporters.

“Some shops are well down and, unsurprisingly, these are the city centre stores or public transport sites.”

Mr Whiteside said the cuts are set to be less deep than those seen at rivals, such as Pret a Manger and Upper Crust owner SSP, which both slashed thousands of roles earlier in the pandemic.

“Those businesses are very concentrated in the areas worst hit by the pandemic – we’ve got a much better spread of locations,” he added.

The company told investors its “immediate priority” is to complete the consultation and said it will confirm the financial impact of the move when the consultation ends in November.

Greggs currently has “under 5,000” staff on furlough and said only a small number would potentially move on to the Chancellor’s new Jobs Support Scheme.

The update came as Greggs said sales have picked up over the past month, as it continues its recovery following the coronavirus pandemic.

The food-to-go specialist said it suffered a “challenging month” in August, as the closure of seated areas meant it was unable to benefit from Eat Out to Help Out.

High temperatures also made August a “difficult month” for trading, it said.

However, more people ate meals outside of their homes in September, which it believes helped to drive improvements.

Since reopening on July 2, its like-for-like sales averaged at 71.2% of its levels from 2019 for the 12-week period to September 26.

In the past month, covering the four weeks to September 26, like-for-like sales were at 76.1% of its levels from the same period last year, as trading improved.

Greggs said its digital business is “developing quickly” after increased investment during the lockdown period, partnering with food delivery operator Just Eat.

In a statement, Greggs said: “The outlook for trading remains uncertain, with rising Covid-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home.

“In these challenging conditions, our teams continue to work hard and have proven our ability to operate with social distancing and adapt to new digital channels.”