Upmarket bakery chain Gail’s has announced ambitious plans to launch another 40 locations following a significant surge in revenue. The company reported a substantial 20% increase in sales, totaling £278m for the financial year ending in February. This growth was fueled by the opening of 36 new bakeries and a robust performance in their retail sector, which saw sales jump by nearly 23%.
However, this rapid expansion has come with a hefty price tag. Despite the soaring revenue, the company’s pre-tax losses actually widened to £7.8m, up from £7.4m the previous year. The directors attributed this financial squeeze to a combination of inflationary pressures—specifically rising staff and energy costs—and the massive capital expenditure required to grow the brand.
The company’s financial filings reveal that a staggering £51m was spent on “store pre-opening costs” alone. This heavy reinvestment indicates a strategy focused on capturing market share rather than immediate profitability. The wholesale division, which supplies major clients like Waitrose, Ocado, and Amazon, also grew, though at a slower pace than the direct-to-consumer retail arm.
Despite the widening losses, the leadership remains optimistic. A spokesperson emphasized the strong year-on-year growth as proof of the enduring demand for “high-quality, nutrient-dense food.” They reiterated the brand’s commitment to improving access to good food and continuing their momentum with purposeful growth.
Currently operating 185 sites, the chain is backed by private equity group Bain Capital. With valuations rumored to be around £500m, and Goldman Sachs brought in to court new investors, the financial strategy appears to be a long-term play for dominance in the premium bakery market, accepting short-term losses for a larger footprint.