22 hours ago
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Greggs has added 5p to the price of a sausage roll and 10p to a latte coffee as it leans on some of its bestsellers to soak up rising wage, energy and packaging costs.
The UK’s largest bakery chain said it had no plans for further price increases at present and it expected inflation to ease this year as it admitted it had sold fewer items in the run-up to Christmas amid a “very tough, challenging market”.
The “targeted” rises mean a sausage roll now costs £1.35 in most shops, up from £1.30 a year ago, while a latte will now cost £2.25, up 10p.
Roisin Currie, the chief executive of Greggs, said the company was “monitoring the market” to see how inflation would evolve as it negotiates a pay rise for workers this year.
She said the company believed it could see a slight cut in the cost of business rates as a result of changes to the property tax in the budget and was “doing a lot to try and remove costs” and battle inflation.
Shares in Greggs slid by more than 8% on Thursday morning as the company said sales at its established company-managed stores rose just 2.9% in the three months to 27 December, with growth led by price rises.
“Subdued consumer confidence continued to impact the food-to-go market, as did weather extremes earlier in the year,” the company said in a statement to the stock market.
The tricky end to the year meant that total annual sales rose 6.8% to £2.15bn as Greggs opened 207 outlets and closed or moved 86. The company said it expected to meet profit expectations of about a £17m annual decline to £173m for the year to 27 December.
It also warned profits for the year ahead were not expected to increase as it plans to open 120 new stores – fewer than hoped under its plans for continued expansion.
Currie said: “It has been a very tough, challenging market last year. It is not just about the high street. If you look at consumer behaviour and how under pressure it has been a tough market to operate in.”
She said households’ disposable income had been squeezed and consumers were choosing to save rather than spend if they did have spare cash, so Greggs was “taking a cautious outlook”.
Currie said inflation was easing and was expected to be lower than it had been for some years and this was good news for consumers. She said the slowdown in price rises would “give a bit of respite to the consumer that’s probably got a bit fatigued [with inflation] over the past few years”.
