Greggs’ new move on ‘pasty tax’

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THE boss of bakery chain Greggs stepped up his fight against the “completely confusing” pasty tax today on the eve of a showdown with the Treasury.

Greggs chief executive Ken McMeikan said customers have given “universal support” to the group’s campaign against Government plans to extend the 20 per cent VAT tax to its hot takeaway food - including pasties and sausage rolls.

Mr McMeikan will present his company’s own proposal tomorrow to David Gauke, Exchequer Secretary to the Treasury, which it claims is “simpler and more workable”.

Greggs would see VAT charged on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging, which would leave fresh bakery food unaffected.

Mr McMeikan said the 300,000 signatures on its petition objecting to the tax proposal were an indication of the high level of customer support.

He said: “Our customers think that this is the wrong tax. They’re completely confused by it. At a time when the consumer is under enormous pressure, our customers remain clear - this is something they do not want.”

Mr McMeikan said Greggs had the support of the National Association of Master Bakers, which represents around 1,000 smaller retailers, and the Cornish Pasty Association.

The bakery chain, which has 1,600 shops in the UK, also said today it had endured six “disappointing” weeks of trading as a result of recent heavy rainfall.

The group recorded a 1.8 per cent drop in like-for-like sales in the 19 weeks to May 12, but its aggressive store-opening programme helped lift total sales by 4.3 per cent in the period.

Greggs chairman Derek Netherton said: “The trading environment for all retailers has remained extremely challenging, and high street footfall has remained relatively weak.”

Mr Netherton said that, to deal with the tough environment, Greggs has continued to control costs tightly, which mitigated some of the impact of the bad weather.

The group opened 25 new shops in the period and is on track to open a net 90 new shops by the end of the year. The baker said it also completed 42 shop refurbishments in the period, in line with its plan to refit a total of 100 to 120 shops this year.

It opened the second “Greggs moment” coffee shop in Middlesbrough, following the launch of a first coffee shop in Newcastle earlier this month, and plans three more coffee shops by September.

Meanwhile, the group said the performance of its first motorway services shop in Cheshire remains “encouraging”. Its second shop, in partnership with Moto Hospitality Limited, is due to open at Birch services on the M62 next month.