Greggs increased its prices for certain items. This includes an additional 5p per sausage roll and the vegan equivalent.
Roisin Currie said that the Newcastle-based company had raised prices on some products in recent weeks, including cheese sandwiches. She added that it was under increasing pressure due to a rising wage bill.
She said Gregorys held off on other products – like breakfast and lunch meal packages – despite cost inflation remaining at 4%-5%. Currie stated that wages are the main factor. “We implemented a wage increase in January.”
She stated that Greggs has “no plans to increase prices at this time” in order to compete with other fast-food chains, such as McDonald’s for a market share in the breakfast and dinner segment.
Greggs announced in March that the US-owned burger chain had been overtaken as the UK’s top breakfast destination. Currie said that the chain has “no further plans” for price increases, on top of the December increases between 5p and $10 on certain items.
McDonald’s announced on Monday that its worldwide sales fell in the second quarter for the first time since nearly four years as inflation-weary customers skipped out on eating out or chose less expensive options.
Currie said Greggs benefited from the current cost-of-living crunch, as consumers looked for low-cost alternatives to eat on the move.
The price increases at Greggs are a reflection of the stubborn inflation levels in the UK for food, as certain commodities continue to rise in price. Wage rises also add to the cost.
Greggs shares rose by nearly 5% Tuesday after the company reported that its underlying profits for the first half of this year were up 16% to £74m. This was 5% higher than expected. Sales increased by nearly 14%, to £961m.
Clive Black is a retail analyst with Shore Capital. He said that he expects some “modest improvements” in profit estimates, but Greggs’ hopes for the entire year remain the same.
Currie stated that the growth in sales was driven by new store openings, relocations and new products such as pizza box deals, iced drinks like its strawberry and mango cooler and strawberries and cream refresher.
She added that the summer sporting events, such as the Euro 2024 football tournament for men and the Olympics, helped to increase digital engagement, and home delivery, with fans buying snacks to go along with their home viewing. Greggs now accounts for almost 7% (up from 5.3%) of its sales.
The group plans to open up to 160 stores in the next six-month period. Currie said that most of them would be located in places such as airports, railway stations and retail parks where they could open at night and expand their share of the dinner industry.
She said, “The evening sales are growing faster than average.” “We’re very focused on this and believe it will be very profitable in the long run.”
She added that trading at night was important not only for walk-in sales, but also for deliveries.
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