Genesis Crafty bakery bought for £1.8m after turnaround plan failed

Genesis Crafty maker and own-label manufacturer McErlain’s Bakery was purchased for just £1.8m in its rescue sale last month, administration documents reveal.

The Northern Irish bakery, which reported £18m turnover in 2017, entered administration in August after failing to make predicted profits following significant capital investment in 2017.

Hatch Brothers, owned by Tayto boss Paul Allen, rescued the supplier, saving 260 jobs. Administration documents reveal that Allen’s business paid £1.85m for the supplier, including £915k paid to lender Danske Bank.

The M&S, Sainsbury’s and Waitrose supplier made “substantial investment into new machinery and staff” 18 months ago, according to the report, but failed to generate expected profits over Christmas 2017.

Soaring butter prices added to the baker’s cashflow woes and McErlain’s subsequently organised a ‘turnaround plan’, which it implemented in May 2018.

However, on 27 July 2018, accounts for June revealed profitability was not improving sufficiently and it started the process to find a buyer, with the pre-pack sale agreed shortly after.