Greggs FD Malcolm Simpson explains his reluctance to be pictured chomping into a sausage roll. Talking from behind the till during a photo shoot at a Soho branch of the famous bakers, he says: ‘None of us will do it because it leaves us open to “fat cat” headlines from mischievous editors.’
To be fair, Simpson’s £257,000 total pay is relatively low compared to his FTSE250 peers – particularly considering he is the most experienced among them.
Simpson took over as FD in 1974 and is now in his 31st year in the job – a feat that saw him top a recent league of ‘old timers’ in Accountancy Age’s sister publication, Financial Director.
Helpfully removing the need for a potentially awkward question, he introduces the topic himself. ‘Someone was telling me with great delight that I was the oldest and longest-serving FD in the FTSE 350,’ says the 62-year-old. ‘I don’t mind.’
He has no plans to retire just yet. ‘I’m very happy and proud with what I’ve done and unlike most of my friends, who have retired, I still enjoy going into work every day. I’ll go until I’m 65 – there’s a massive amount to interest me and to keep me going.’
The records Simpson is keenest to talk about, however, are unrelated to how ‘long in the tooth’ he has become.
First, there is the extraordinary growth of the company he joined in 1973 – from a handful of shops to a FTSE250 giant with plans to conquer the continent with sausage rolls and Cornish pasties.
‘I was made financial director of a very small 28-shop company. Now it’s 1,260,’ he says. The goal is to reach 1,700 by 2010 and – ultimately – 2,000. Four ‘pilot’ branches have also landed in Belgium, and Simpson confides he would like to take the brand stateside.
The veteran FD pulls out the company’s glossy annual report to illustrate the next record that fills him with pride.
His finger points at a graph showing that – with one exception in 1991 – earnings per share and dividends have risen every year since Greggs’ flotation in 1984. ‘There are not that many companies with that sort of trajectory and length of growth,’ he says.
But these days, a very different type of growth provides one of the big challenges – that which occurs around waistlines.
Greggs is fighting to show it still has a place in a world where dire warnings about an obesity epidemic fill the airwaves and its traditional fare of fat and salt-laden pastries and sugary iced buns are vilified as public enemy number one.
Simpson, who confides that another reason for his reluctance to chomp into a sausage roll is that he is on a diet, acknowledges the need for change. He points to Greggs’ new low calorie ‘Just’ sandwiches, without condiments such as mayonnaise, and salad-based ‘Lifestyle’ range.
But he strongly rejects proposals floated last year for a ‘fat tax’ and defends the right to choose enjoyed by the vast majority of Greggs customers, who turn their noses up at the healthier ranges.
‘I think the most important thing is to allow people to have the choice and then to signpost the choice very clearly in terms of, perhaps, colour coding so that people don’t have to examine minute labels to see what it is they want.’
But there is no escape from the nanny state and he admits Greggs is looking at ways of cutting salt and sugar, even in its standard fare.
Simpson is confident that the company will ride out changes to the way people eat and his track record gives grounds for confidence.
After qualifying with KPMG in 1964, and a spell with Proctor & Gamble from 1965 to 1973, he joined Greggs with a view to putting what he had learned into practice.
Simpson immediately demonstrated a talent for moving with the times, driving through the replacement of mechanical computers with their modern day electronic equivalents.
‘This will certainly date me,’ he says. ‘When I went in, the largest machine they had was a comptometer, a sort of metal box with keys sticking up rather like the old fashioned typewriter.
‘There was a Kalamazoo book system which, as old timers like me will remember, is a sort of handwritten ledger system that carboned through. But in 1976, I suggested to (then managing director) Ian Gregg – and he bravely followed along – that we put in real computers. I’ve always been responsible for both IT and finance and taken a very strong interest in both.’
In fact, Simpson’s involvement in technology even extends to software design.
Chatting to a shop assistant during the photo shoot at Greggs, he discovers with evident pleasure that both helped develop the till software: he contributed to the initial design and she tailored it to her branch.
‘Transactional systems really aren’t rocket science. Where you need sophistication is in analysis of the data and there we’ve transferred to a sophisticated Oracle database. But we are quite unusual in that we programme just about all of our systems inhouse,’ he says.
There has been no shortage of upheaval during Simpson’s tenure. Greggs faced stiff competition from supermarkets with new in-store bakeries in the eighties.
It survived by shifting focus to fresh sandwiches and other takeaway products to take advantage of its outlets’ proximity to office workers. By 1984 Simpson was able to oversee the flotation that put the company in the FTSE250.
Another major shift has been the burgeoning of regulation. ‘That is growing enormously and it’s very stifling and detracts from the time that one could spend really managing the business and moving it forward,’ says Simpson.
He lets slip a spot of nostalgia for simpler times. ‘I enjoyed very much what I was doing in those days and things have become a little more sophisticated now, but one was able to progress quite quickly. Sometimes simplicity actually has a merit all of its own.’
He remains surprisingly unruffled by the onset of international financial reporting standards, which he says do not affect Greggs as much as other companies because of the company’s relatively simple, integrated business model. The company does all its own manufacturing, transportation and sales.
The only major impact will be IFRS2, relating to employee share options, because of a long-standing company policy to hand 10% of pre-tax profits back to employees. But he says that even that will affect the P&L by just £100,000 per year, against a profit of £40.5m.
For anyone looking to emulate the kind of staying power that Simpson has evidently mastered, he has one key piece of advice. ‘The thing to guard against is the old saying “we’ve always done it that way”. You’ve continuously got to be on guard against that,’ he says.
Equally important is interaction with colleagues. ‘They certainly wouldn’t allow me to become a pontificator. There would be some derision coming in my direction if they were to feel I was getting ossified in the job.’
He says the increasing tendency for FDs to move from company to company is a ‘sad reflection’, though he accepts it may be legitimate early in a career to build up a portfolio of experience.
‘I like being with the business for the long term and I like doing things that won’t see profit or results this year, but the year after or even the year after that. I do like to keep ploughing back into a business. It’s like nurturing plants – you get a long-term growth.’
And Simpson emphasises the value of experience. ‘It does help you to short cut through a lot of things because you have seen a similar situation before and can get to the answer quickly.’
It almost comes as no surprise that, when he closes the office door at Greggs behind him for the last time, Simpson will not be heading off to tend his vegetable patch.
‘After I retire I would like to get involved as an adviser or non-exec with smaller businesses, but as a freebie not for reward. I don’t want to spend too much time because I’ve had a long career. But I would like to put a little bit back and help advise people who are starting the journey that I’ve been through.’
THE ECCLES CAKE CONTROVERSY
Greggs courted controversy in October when the town of Eccles reacted with fury to its decision to drop the Eccles cake. The ailing product had already been scrapped at many outlets, but the final straw came when it disappeared from a branch on the very street where James Birch first sold the traditional snack in 1796.
Salford council launched a protest by munching their way through 60 Eccles cakes at their monthly meeting. The local radio station launched a ‘let them eat Eccles cake’ campaign, which spawned a ‘national Eccles cake day’. Even the local MP got involved, taking part in an Eccles cake stacking competition with the Mayor.
Simpson says the decision was taken at regional level by one of Greggs’ 12 operating divisions, but he backs them to the hilt. ‘The decision was quite right in my opinion because in any business you’ve got your winners and you’ve got your losers.
‘It’s unfortunate because I think it was a great product but it wasn’t selling and particularly it wasn’t selling in Eccles.
‘It did get a lot of publicity which probably attracted more trade and we said immediately if the Eccles public wanted to turn out we would be happy to reintroduce it, but there has been no turnout so far.’
The same month Greggs revealed it had raised prices by 2.4% in the 18 weeks to 18 October and said the upward trend was likely to continue.
The situation was due to factors such as the rising minimum wage and increased price of pork and gas, which it uses to fire the ovens that produce two million sausage rolls every week.