Real Good Food Invests in Expansion of Two Cakes and Decoration Plants

Real Good Food announces that it has raised a total of GBP15.5m of expansion capital from a new investor and two existing shareholders by way of both debt finance and new equity. 

The company has decided to embark upon an expansion plan at two of its subsidiary companies, Renshaw and Haydens, that produce cakes and decorations, in order to meet the rising demand for this type of products. 

The two main areas of investment are at Renshaw’s Crown Street site in Liverpool and Haydens in Devizes. Both these businesses are seeing significant increases in forward demand; this has been driven by international expansion and the launch of a mainstream retail brand at Renshaw and the acquisition of two major new retail customers at Haydens.

At Renshaw, the Company will invest approximately GBP7m in expanding capacity by over 50% as well as the installation of new soft icings and discs production lines which support the strategy to broaden the offering to mainstream users.

At Haydens, the acquisition of two new major customers has put short term pressure on operational capacity and the Company will therefore invest approximately GBP8m in order to reconfigure site operations, including blast freezing capability and the installation of a new, automated Yum Yum line. This is expected to take the site capacity from its existing level of up to approximately GBP30m revenues to over GBP50m. 

Both of these investments, as well as increasing capacity, bring significant benefits in efficiency, upskilling the workforce and mitigating the impact of the forthcoming Living Wage increases.

“As we have already advised shareholders, we believe that there is a significant opportunity to invest in our operating subsidiaries to drive more efficiency, customer growth and improve operating margins, which ultimately will accelerate the company’s organic growth. We have already embarked upon this within our Cake Decorating division and are seeing positive results in order intake at Renshaw and Rainbow Dust. The Board has taken the decision to raise the expansion capital on order to enable us to accelerate our investment program into other divisions, including a major increase in capacity at our Haydens site within the Premium Bakery.”