FDBusiness.com

Real Good Food, the UK diversified food business, has raised a total of £15.5 million of expansion capital from a new investor and two existing shareholders by way of both debt finance and new equity. Real Good Food will now embark upon an expansion plan at two of its subsidiary companies – Renshaw and Haydens.

Real Good Food serves a number of market sectors including retail, manufacturing, wholesale, foodservice and export. The group focuses on three main markets – cake decoration (Renshaw, Rainbow Dust Colours), food ingredients (Brighter Foods, Garrett Ingredients and R&W Scott) and premium bakery (Haydens and Chantilly Patisserie).

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, Real Good Food will invest approximately £7 million 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 Real Good Food will invest approximately £8 million 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 site capacity from its existing level of up to approximately £30 million revenues to over £50 million of revenues.

Pieter Totté, executive chairman of Real Good Food.

Both of these investments, as well as increasing capacity, bring significant benefits in efficiency, up-skilling the workforce and mitigating the impact of the forthcoming Living Wage increases. The majority of the expansion plan is expected to be completed by the end of September 2017.

Pieter Totté, executive chairman of Real Good Food, comments: “We believe that there is a significant opportunity to invest in our operating subsidiaries to drive more efficiencies, 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 in order to enable us to accelerate our investment programme into other divisions, including a major increase in capacity at our Haydens site within the Premium Bakery.”

He adds: “We believe this is the first significant step in funding a major medium term investment programme which will secure our competitive position for the longer term and ultimately will drive future returns for shareholders.”