Greggs Bakery Expands Amid Falling Sales and Strategic Questions Over 800 New Outlets Planned

Greggs, the United Kingdom’s largest bakery chain, finds itself at a critical juncture as it pursues ambitious expansion plans despite deteriorating sales performance and mounting scepticism from market analysts. The company’s commitment to opening 800 additional branches and constructing two new factories has raised fundamental questions about whether the British market has reached saturation point for the bakery retailer’s offerings.

The scale of Greggs’ manufacturing operations remains impressive by any measure. The company’s Newcastle upon Tyne facility produces the equivalent of one million sausage rolls daily, with production lines holding 4.5 tonnes of pastry at any given moment. Every product sold across the chain’s 2,675 outlets originates from this industrial-scale operation, where ingredients are measured in 16.5 kilogramme flour bags and fat blocks transported by forklift truck.

The Newcastle site added a fourth production line during 2024, yet the company considers this insufficient for its growth ambitions. Greggs is establishing an automated production facility in Derby, with a second site scheduled to open in Kettering, Northamptonshire, during 2027. Capital expenditure for 2025 reached an estimated £300 million as the retailer works towards its target of operating 3,500 stores nationwide.

This aggressive expansion trajectory has prompted concern amongst investors and analysts, particularly as like-for-like sales have declined whilst the company continues opening new locations. Shares in the FTSE 250 constituent have depreciated approximately 40% over the past year, concluding 2025 as the most heavily shorted stock on the London market. Chief Executive Roisin Currie has rejected suggestions the company has reached maturity, asserting in July that Greggs maintains capacity for growth and has historically recovered from economic downturns.

Analysts at Panmure Liberum have described the chain as sitting at a crossroads, a sentiment echoed by market observers questioning whether new branch openings can sustain growth or merely redistribute existing customers amongst competing locations. Restaurant consultant Peter Backman drew comparisons with Subway’s approximately 2,000 UK branches, suggesting Greggs approaches the natural ceiling for store numbers whilst cautioning that footfall growth remains uncertain.

The company’s transformation from traditional bakery to food-to-go specialist underpinned its recent success. Under former Chief Executive Roger Whiteside’s leadership during the 2010s, Greggs abandoned conventional products such as loaves to concentrate on takeaway food. This strategic pivot proved successful, with the chain achieving £1 billion in annual sales during 2018 and doubling turnover to £2 billion by 2024.

The launch of a vegan sausage roll in 2019 exemplified Greggs’ ability to generate cultural attention through product innovation and social media marketing. The company further diversified its menu under Currie’s stewardship, introducing items including pizza and macaroni cheese. Brand collaborations, notably with budget retailer Primark on a sold-out festival wear range, enhanced the company’s visibility beyond its core market.

However, 2025 marked a notable reversal of fortunes. Management initially attributed the worst sales growth since the pandemic to inclement weather during winter months. Summer temperatures subsequently diminished consumer appetite for pastry products, intensifying scrutiny of the company’s strategic direction. Singapore-based activist investor Lauro Asset Management has criticised management and urged cost reductions to prevent the company becoming a takeover target.

Pricing strategy has emerged as a contentious issue. Research from Jefferies found Greggs’ sandwiches cost 6% more in October 2025 compared with the previous year, whilst key hot items increased 4.5%. The signature sausage roll, priced at 66 pence in 2012, now retails for £1.30 in Newcastle city centre, representing a doubling of cost. Analysts describe this pricing as “ahead of the market”, though Jefferies concluded pricing remains competitive.

The potential impact of weight-loss medications on sales of calorific pastries represents an additional concern, although Greggs has introduced healthier options including fruit pots and salads. International expansion appears implausible given the brand’s distinctly British proposition. A previous five-year venture into Belgium concluded unsuccessfully in 2008 when the company closed its Engelse Bakker outlets.

Despite calls to concentrate on core operations, Greggs continues experimenting with alternative formats. The first Bitesize Greggs location opened at Sevenoaks railway station in November, targeting high-footfall environments with smaller premises. The company’s annual Christmas pop-up, a Greggs-themed public house within Newcastle’s Fenwick department store, sold out its bookings despite substantially elevated pricing compared with standard outlets.

The company’s trading update scheduled for 8 January will reveal festive season performance, including sales of seasonal products such as festive bakes and mince pies. Dan Coatsworth, head of markets at AJ Bell, described the announcement as potentially pivotal for the company’s strategic direction. Market participants await evidence that management can stabilise performance whilst pursuing expansion, or whether a fundamental reassessment of growth strategy proves necessary.

Greggs retains considerable loyalty in its Newcastle heartland, where the company originated in 1939 when founder John Gregg delivered eggs and yeast by bicycle. The business opened its first shop in the Gosforth district during 1950, with a branch remaining on that high street today. Expansion accelerated during the 1970s and 1980s through acquisition of regional bakery chains, ultimately employing 33,000 staff across locations from Elgin in Scotland to Truro in Cornwall.

Whether this heritage and market position can sustain the company through its current challenges remains uncertain. Investors and analysts seek clarity on how Greggs intends to justify continued capital investment whilst addressing deteriorating sales metrics and defending its market valuation against short sellers betting on further decline.