Greggs warns of further price rises as costs soar

Greggs has warned that the price of its products is likely to go up for the second time this year as it faces runaway increases in costs.

The fast food chain said it had already increased some prices at the start of the year, and that further changes are expected.

The cost of doing business is expected to rise between 6% and 7% for the company this year due to higher staffing and ingredient costs.

It said it will try to protect its reputation for being “outstanding value for money”.

“This has necessitated some price increases, which were made at the start of this year, and further changes are expected to be necessary,” Greggs said.

“As ever, we will work to mitigate the impact of this on customers, protecting Greggs’ reputation for exceptional value in the freshly-prepared food-to-go market.

“Given this dynamic, we do not currently expect material profit progression in the year ahead.”

The business swung back to a profit last year after taking a hit in 2020 when many of its shops were closed for much of the year due to the pandemic.

The chain notched up a £145.6 million profit before tax, from a loss of £13.7 million the year before.

Sales rose 5.3% compared with 2019, the year before the pandemic, reaching £1.2 billion.

Greggs plans to extend late opening times to 500 shops around the country, and will start offering delivery from 1,300 of its stores. Delivery is currently available from 1,000 sites.

Ross Hindle, an analyst at Third Bridge, said: “Overall, the UK food-to-go market remains depressed, with commuter footfall stubbornly below pre-Covid levels.

“Despite difficult trading conditions, Greggs has been able to punch above its weight thanks to a recipe of competitive pricing, clever location strategy, and their JustEat delivery partnership.

“In 2021 Greggs drove revenue growth through store expansions, opening some 131 new shops.

“More shops may have meant more sausage roll sales, but a lack of like-for-like growth is now a concern.

“With the wow factor of its vegan offerings now a distant memory, Greggs needs to provide more innovative and broad meal and drink choices, our experts say.”