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Greggs brushes off pandemic hiring worries in 100-store expansion plan

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Greggs bakery store in Barnsley, England. Photo: Nathan Stirk/Getty Images
Greggs bakery store in Barnsley, England. Photo: Nathan Stirk/Getty Images

High street bakery chain Greggs (GRG.L) brushed off concerns about a hiring dearth in the UK as it set a target of opening 100 new stores in the second half of 2021. 

The reassurance came despite CEO Roger Whiteside saying on the company's first-half earnings call that the business had seen "a lot of operational noise" due to the 'pingdemic' of notifications telling its staff to self isolate. This was true across both retail outlets and its delivery operations. 

Whiteside said shops had been "prepared to shut early and open later."

"We have flexed as needed to make sure we look after our people," he said, noting that the volume of staff that had been asked to self-isolate seemed to have peaked a week ago. 

Businesses across the hospitality sector have been struggling to hire workers over the last months, in part due to an exodus of workers in the sector following Brexit and also owing headwinds caused by the COVID pandemic. 

Confident of a post-pandemic bounce-back to normality, the sausage roll retailer plans to employ 500 new members of staff in the second half of the year. 

He also said that Greggs would need a lot more lorry drivers in the future, and that the "headline pay rate may come under pressure" as demand increases. 

Some companies have been offering bonuses and enhanced pay packages to lure in workers — Greggs said they wouldn't consider this until the annual review at the end of its financial year. 

Supply chain issues are being felt across the sector. The Road Haulage Association (RHA) reported last week that there is a shortage of 100,000 drivers and warned the situation has reached a “crisis point” with critical supply chains failing.

Read more: Why is the UK facing a HGV driver shortage and what could it mean for consumers?

It said that many drivers have gone back to their home countries either due to uncertainty over new Brexit rules, or because of UK’s COVID-related lockdown restrictions. Many have not returned.

On top of this, HGV (heavy goods vehicle) drivers are made up of an ageing population that is retiring; and there is a major backlog of tests needed to be taken before drivers can qualify to operate lorries, because the tests were put on hold during the pandemic.

Greggs reported that it had returned to a first half pre-tax profit of £55.5m ($77m), after flaky pandemic sales. It had plunged to a £64.5m pound loss during the same period last year.

It is also paying an interim dividend for the first time since 2019.

Interim results showed that 48 new shops opened in first half with 11 closures. There were 2,115 shops nationwide as of 3 July 2021.

"Whilst there continue to be general uncertainties in the market, given our recent performance we now expect full year profit to be slightly ahead of our previous expectation," said CEO Roger Whiteside.

Read more: Inside JD Wetherspoon's new €33m Dublin hotel — its biggest ever investment

Analysts at Barclays said that investors will be watching trading as the second half of the year progresses, whether it can progress trade through its app and evening opening hours and the challenges of balancing store growth and supply chains. 

The update followed a positive first quarter, where it said it had seen a strong recovery in sales.

Watch: Should I book a holiday in 2021?

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