Gail’s expands nationwide after sales surge, but losses widen

Gail’s, the premium bakery and café chain, is planning a further wave of openings across England after recording another year of rapid sales growth, underscoring both the resilience of demand for higher-end everyday food and the mounting cost pressures facing hospitality operators.

The company intends to launch 40 new bakeries by the end of February 2026, following the opening of 36 sites in the last financial year. The expansion marks Gail’s continued shift beyond its traditional London and South-East heartland, including recent moves into the South West and its first airport branch at Gatwick. The chain now operates around 180 bakeries nationwide.  

Newly filed accounts show sales rising by close to 20% to £278m in the year to February 2025. Revenue in the retail bakery estate climbed 22%, while the wholesale division, which supplies retailers including Waitrose and Ocado, grew 15%. Directors said the wholesale market remained highly competitive, but maintained that the business is attracting customers through product quality and pricing they regard as accessible for a premium brand.  

Despite this growth, Gail’s losses deepened. Pre-tax losses widened from £7.4m to £7.8m, with the company pointing to higher staffing and utility costs alongside ongoing investment in new sites. The group recruited 488 employees during the year, taking its workforce to more than 4,000. Payroll costs rose from £87.4m to £108.9m, a jump that highlights the labour intensity of a bakery-café model at scale.  

Chief executive Tom Molnar said the high street bakeries were now the fastest-growing part of the group but described the market as “very competitive”, signalling that expansion is as much about defending share as capturing new ground.  

The strategy plays out against a broader recalibration in the bakery and grab-and-go sector. Greggs, the country’s largest bakery chain, has slowed its own rollout plan, citing weaker consumer confidence and the expected impact of recent National Insurance contribution changes. It is aiming for 120 net new stores in 2025, down from earlier expectations, and has warned of a £20m cost hit from employer tax changes.  

For business owners in hospitality, including fish and chip operators, the contrast between Gail’s momentum and its widening losses lands on familiar territory. Demand may be holding up for strong brands that offer convenience and perceived quality, but profitability is being strained by wage inflation, energy costs and the expense of hiring and training staff. Gail’s expansion suggests that some consumers are still prepared to trade up for everyday treats, yet the company’s results also show how quickly growth can be absorbed by operating costs.  

The chain’s backers will be watching closely. Gail’s has been backed by private equity firm Bain Capital since 2021 and is part-owned by the hospitality entrepreneur Luke Johnson. Reports that an auction process was explored last year were not commented on by the company, but they underline how growth and future ownership options may be linked.  

Former managing director Marta Pogroszewska has previously suggested there could be 300 to 500 viable Gail’s locations across the UK. If the current trajectory continues, the chain’s footprint could more than double over time, intensifying competition for premium sites and skilled staff on already pressured high streets.  

For the wider sector, the central question is whether premium convenience can keep expanding without eroding margins. Gail’s is betting that regional demand will support another burst of openings. Its next year of growth will test not only the strength of that consumer appetite but also the ability of hospitality businesses to scale in a market where costs are rising faster than many prices can follow.