11 Jan 2012

Little Chef to slim down and axe 600 jobs

The motorway service station chain Little Chef is shutting 67 outlets and axeing almost a third of its workforce. But Greggs the bakers are raising a toast, after seeing their Christmas profits soar.

A Little Chef breakfast

It’s the roadside chain of diners famously transformed by the celebrity chef Heston Blumenthal, for a reality series on Channel 4. But despite the souped-up ‘New Concept’ menu, the beleagured Little Chef has warned 600 employees their jobs are at risk.

Little Chef went into administration more than four years ago, and was snapped up for less than £10m by the private equity firm and turnaround experts R Capital. The following year, Heston Blumenthal was brought in to revamp the menu, putting dishes like braised ox cheeks and ale and vegetable casserole alongside the truckers’ favourite Olympic breakfast.

The Heston effect

The Hestonised branch, in Popham on the M3, was so well received that it earned an entry in that year’s Good Food Guide. This year, with 13 diners already converted, R Capital announced a multi-million pound investment programme to roll out his menu across the country, along with what it called a “McDonald’s style drive through service”.

But this year’s problems, says the firm, aren’t being blamed on Heston’s failure to transform the food. According to PR boss Richard Hillgrove, who worked for the chain in 2007, his ingredients proved more expensive, on top of the costs of refurbishing the ‘New Concept’ sites.

‘Disaster’ for jobs

Little Chef’s chairman Graham Sims said many outlets had uncompetitive leases, and it had proved impossible to make them viable. Instead he said the firm would focus attention on “protecting over 1,500 of our colleagues’ jobs”. Union leaders are furious at what they see as asset stripping by its private equity owners – the GMB’s Paul Maloney calling it a “disaster for jobs, while enriching the millionaire elite”.

Selling like hot cakes

But there’s been more seasonal cheer for the high street bakers Greggs, thanks to snack-loving Brits, who’ve chomped their way through seven and a half million mince pies and a million ‘festive bakes’, or ‘Christmas lunch in a pastry’. They’ve reported an increase in sales of more than 10% over the Christmas period, with its cheap and cheerful baked good selling like, well, hot cakes.

In sharp contrast to the shrinking Little Chef, Greggs now employs 20,000 people across the country, more than a certain American hamburger chain. Next on the agenda: more recession-busting ‘meal deals’, and a new push towards the takeaway market, developing dishes to cook at home.

The bargain sandwich is becoming the symbol of our cash-strapped times. Just don’t ask who ate all the pies.