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Ken McMeikan, the boss of Greggs who led a campaign that defeated the government over a proposed "pasty tax", is quitting to take the top job at a private equity-backed catering firm.
His decision to join Brakes Group, which supplies frozen food, readymeals and catering equipment, is a blow for the Newcastle baker where trading has stuttered in recent months. The shares closed down nearly 3% on Monday at 472.5p.
The former supermarket executive who is also a Royal Navy veteran of the 1982 Falklands war, is joining a company three times Greggs' size and the move is expected to be a lucrative one. His salary at Brakes will easily surpass the £664,035 earned at Greggs last year, analysts said.
Brakes has operations in the UK, France and Sweden, and sales of £2.6bn but its roots are as a family outfit founded in 1958 by brothers William, Frank and Peter Brake. The sons of a Kent publican, who had learned their trade at catering school, started out supplying poultry to caterers and were quick to realise the potential for selling frozen food in the early 60s.
The company has been in private equity hands – most recently Bain Capital, the US firm co-founded by presidential hopeful Mitt Romney – for the last 10 years but before that was quoted on the stock exchange.
During a four-year stint McMeikan has led an aggressive expansion of the baker, which has two outlets on some high streets. Today Greggs has 1,641 shops, compared with the 1,368 he inherited and has branched out into new areas such as coffee shops.
However, McMeikan is best known for fronting the "pasty tax" campaign which forced George Osborne into an embarrassing U-turn over his plan to impose 20% VAT on savouries such as sausage rolls, Cornish pasties and steak bakes that are sold warm. McMeikan said it had "been a great honour to lead Greggs" and insisted there were "many exciting growth opportunities ahead for the business".
Espirito Santo analyst Sanjay Vidyarthi said the timing of McMeikan's departure was "unhelpful", adding: "Greggs is at a difficult point in its evolution at the moment, with pressure on trading and decisions to be made on how best to allocate capital [for store refits or roll-out]."
Greggs said trade had not improved since it last updated investors in October. At that time like-for-like sales were down 2.6%. Vidyarthi, who has pencilled in annual profits of £51.5m, said that after last year's strong Christmas trading "we think Greggs will have its work cut out to meet market expectations".
The company has begun the search for a new chief executive and said McMeikan would continue in his role until a successor is appointed. "We are very grateful to Ken for the valuable contribution he has made to Greggs," said chairman Derek Netherton. "He has led the company through the major changes that have put us in a strong position for the future with a clear strategy for growth in a difficult environment."
McMeikan joined Greggs from Sainsbury's where he was the retail and online home shopping director. Before that he was chief executive of Tesco Japan.
Brakes chairman Dwight Poler said McMeikan would take charge of a five-year, £250m investment programme: "With a background of world-class leadership in food, food service and retail, Ken has the perfect mix of experience to lead Brakes."
Brakes facts
• Brakes was started by three Kent brothers William, Frank and Peter Brake, after they left catering college in 1958. Its mainstay was supplying poultry to local restaurants.
•Brakes was worth £55m when it floated on the stock exchange in 1986; it was bought by US private equity firm Clayton, Dubilier & Rice for £434m in 2002.
• It has grown rapidly by buying smaller rivals and was bought by Bain in 2007 for an estimated £1.4bn.
• At last count sales were more than £2.6bn and it had 10,000 employees, with business in the UK, Ireland, France and Sweden.
• It supplies pubs, schools, hospitals, contract caterers with equipment and brands such as Clever Chef, Freshfayre and The Pudding Factory
