UK bakery chain Greggs has defied hospitality industry gloom with a 15 per cent rise in sales in the most recent quarter, despite pushing through a series of price rises in the past year.
Compared with the same period last year, the group recorded a 14.7 per cent increase in total sales and a 9.7 per cent increase in like-for-like sales. Its share price was up nearly 10 per cent to £18.92 in early afternoon trading in London.
The strong performance came as the retailer pushed through price rises of between 5p and 10p across its product range. Shop closures on the day of the Queen’s state funeral in September also shaved 1 percentage point off sales growth, the company said.
The best-selling Greggs sausage roll now costs £1.15p, up from £1.10p when the last price rise was introduced in May. In December last year, before the succession of price increases, it cost just £1. Overall cost inflation for 2022 is around 9 per cent, the retailer said.
Roisin Currie, chief executive of Greggs, said it was “really pleasing” that the business continues to trade strongly.
She attributed some of the company’s success to having fewer expensive items than rivals, making it easier to attract customers looking for affordable food and drink at a time when many are struggling with squeezed incomes and high inflation. “We’re working really hard to make sure that customers can still get value from us.”
She added that she hoped Greggs could win new business as consumers trade down to beat rising prices.
“We are a value-led business, so it’s times like this when we just make sure for those customers that maybe don’t know about Greggs, or maybe don’t come into us very frequently, we can encourage them to come more to us,” she said.
Julie Palmer, a partner at Begbies Traynor, said the trading update suggested Greggs could be a “scarce winner” during the cost of living crisis “as customers seek to trade down to the more affordable menu in these difficult times”.
Greggs said it had opened 106 shops so far this year and was on target to increase its estate by 150 stores by the end of the year. It currently has 2,271 shops.
It also said it had signed new forward purchase contracts to cover energy and food supplies for the fourth quarter. It expects that its energy price hedging will keep costs below the government’s business energy price cap of £211 per MWh for electricity and £75 per MWh for gas.
