Real Good Food to make further job cuts
In May 2022 the company launched a voluntary redundancy programme, which will reduce headcount by 51. However, the Board has been working with external consultants to put into effect a more “radical reform” to eliminate overhead costs and to build stronger partnerships with key customers.
The group said it had made a “good recovery” from Covid at the start of last year. In September 2021 the Company had faced down the challenges of COVID-19, narrowing pre-tax losses considerably to just £3.5m.
Challenging
However, trading conditions have been challenging since the start of the calendar year. It is continuing to be impacted by daily supply shortages and erratic deliveries of key ingredients and there has been “hyper cost inflation” with the cost of sugar doubling and costs overall up by about 30%.
The wider economic conditions have also affected short-term demand for products as households react to pressure on disposable incomes, it said.
It highlighted the challenges facing the sector as one of its competitors (Food Innovations) was recently put into administration. The non-edibles division of Food Innovations Group was recently sold to baking and cake decorating wholesaler Culpitt.
Cost savings
Real Good Food described its recovery plan as “well defined” and includes significant price re-sets with customers and c.£3.2m of overhead cost savings to take the business back to profitability.
The group, with support from advisers, is in advanced discussions to secure an additional £2.5m of funding to support the restructure.
Mike Holt, executive chairman, said: "Market conditions have remained extremely challenging due to a perfect storm of rising costs and lower revenues resulting in a reduction in management's expectations for the current financial year.
“To mitigate this, we are putting into effect a more radical programme to reduce costs, protect revenues and preserve the inherent value of the group."
