Greggs faces investor scrutiny as expansion pace tests margins
Critics warn the bakery chain expanded too quickly and risked overcomplicating its menu, as shares slump and a fragile consumer backdrop persists.
Greggs faced fresh investor scrutiny after a string of profit warnings knocked its shares roughly in half over the past year. The bakery chain has pursued an aggressive expansion plan while contending with higher costs and a softer consumer backdrop, a combination that has left investors cautious ahead of an upcoming trading update.
Chief executive Roisin Currie attributed part of the weakness to weather, saying hot conditions dampened demand for staples such as steak bakes and sausage rolls, including both vegan and meat varieties. The remarks underscored how external factors have periodically dented sales as Greggs moves to broaden its footprint.
Despite the setbacks, Greggs is pressing ahead with its growth agenda. Up to 150 new stores are expected to open by year-end as part of a plan to reach about 3,000 outlets. The company has extended opening hours and rolled out more evening meals, including pizzas, chicken goujons and hot baguettes. On Thursday the chain opened its first pub — serving local beers alongside 15 Greggs-inspired dishes — in the Fenwick department store in Newcastle upon Tyne.
Investors and analysts have split on the implications. Russ Mould, investment director at AJ Bell, said questions about whether Greggs has expanded too far, too fast and whether its menu has become too complicated have added to worries about the state of the UK economy. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, cautioned that while price increases have helped sustain like-for-like sales, the broader environment remains fragile and Greggs must avoid alienating budget-conscious customers.
Greggs was a standout during the cost-of-living crisis, briefly overtaking McDonald’s as Britain’s most popular breakfast venue. But rising costs, including last year’s National Insurance employer contributions, have weighed on margins for retailers and put pressure on pricing power. The company is balancing price moves with menu simplification and focus on core formats to preserve demand while expanding.
With a trading update due this week, Greggs faces a test of its strategy: sustain momentum across a broader store base while navigating a still-challenging consumer economy and higher operating costs. The path ahead will hinge on how successfully it can manage input costs and keep customers engaged across its growing mix of locations.