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Greggs is a staple of the High Street, serving up a diet of affordable pastries, sandwiches and sweet treats. But a series of profit warnings has knocked the stuffing out of the bakery chain’s share price, which has halved in the past year, leaving investors queasy ahead of this week’s trading update.
The latest alarm was sounded in the summer when chief executive Roisin Currie blamed the hot weather for stifling customers’ appetite for steak bakes and sausage rolls – both vegan and meat varieties.
Despite the setbacks, Greggs is pushing ahead with ambitious expansion plans. Up to 150 new stores are set to have opened by the end of this year as part of a wider drive to hit a total of 3,000 outlets.
Greggs has also been extending opening hours across its stores and has rolled out more evening meals including pizzas, chicken goujons and hot baguettes. And yesterday it opened its first pub – serving local beers alongside 15 Greggs-inspired dishes – in the Fenwick department store in Newcastle upon Tyne.
‘Questions as to whether Greggs has expanded too far, too fast and made its menu too complicated have added to wider worries over the state of the UK economy,’ said Russ Mould, investment director at stockbroker AJ Bell.
The high street baker was a clear winner during the cost-of-living crisis, overtaking McDonald’s as Britain’s most popular breakfast venue.
However, like other retailers, it has been hit by rising costs, especially from the employer National Insurance increase in last year’s Budget.
‘The broader consumer spending environment remains fragile,’ said Aarin Chiekrie, equity analyst at the investment platform Hargreaves Lansdown. ‘While Greggs has relied on price increases to support like-for-like sales growth, the company must be careful not to stretch customer tolerance too far,’ he added.
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