Private equity firm Bain Capital is doubling down on its investment in Gail’s Bakery as the chain reveals plans for 40 new outlets. The bakery, which has seen its valuation float around the £500m mark, is in the midst of a significant growth phase. Last year alone, the company generated £278m in revenue, a 20% increase from the previous year.
To sustain this momentum, the ownership group has reportedly hired Goldman Sachs to explore options for bringing in new investors. This injection of capital is deemed necessary to drive further expansion and compete on a national level. The company has already invested heavily, spending £51m on pre-opening costs for new stores in the last financial year.
Despite the top-line growth, the bottom line presents a challenge for investors. Pre-tax losses have widened to £7.8m, driven by inflationary headwinds including staff and energy costs. For potential investors, the narrative is one of scaling now to reap profits later, a common strategy in private equity-backed retail models.
The business fundamentals remain strong, with retail sales growing at double the pace of the wholesale division. The brand also possesses a strong heritage, founded in the 1990s and grown carefully over decades, which adds value beyond simple asset ownership.
As the company moves from 185 sites to over 200 and beyond, the financial strategy will likely shift from pure expansion to operational efficiency. For now, however, the focus remains firmly on planting flags in new territories and securing the capital to do so.