Greggs starts year healthily as absence of Covid measures drive major sales growth

Greggs has begun the year with bumper revenue growth as it benefited from strong demand for affordable treats.

The bakery chain revealed turnover expanded by 17.1 per cent on a like-for-like basis for the opening 19 weeks of 2023, while total sales jumped by more than £100million to £609million.

Trading rose significantly compared to the equivalent period last year, with the early part of 2022 hit by the omicron variant of Covid. 

This reduced commuting into city centres after Britons were encouraged again by the Government to work from home.

Biting: Greggs has begun the year with bumper revenue growth as it benefited from a lack of pandemic restrictions and strong demand for affordable meals

Besides the absence of travel restrictions, the company has gained from longer opening times at hundreds of outlets driving purchases of hot food items like pizza and chicken goujons.

In addition, Greggs noted that demand for its plant-based products had received an uplift from the popularity of its newly-created vegan Mexican chicken-free bake.

Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: ‘UK consumers may be proving a bit flaky when it comes to big-ticket items, but appetites are still strong for pasties, and sausage rolls on trips out to the shops, on lunchbreaks or trips away.’

She added that the cheap price of Greggs’s treats was helping ‘keep sales hot amid the cost-of-living crisis.’

The Newcastle-based group has warned profits would be impacted this year by rising cost inflation of around 9 to 10 per cent, driven especially by staff salaries and skyrocketing energy bills.

Costs have been passed onto customers through price hikes, including on its famed sausage rolls, which now cost £1.20 each after being £1 at the start of January 2022.

Analysts forecast Greggs will report approximately £163million in pre-tax profits for 2023, compared to £148.3million last year.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: ‘The cost of raw materials, energy and wages are all rising rapidly, and Greggs is significantly exposed to all three.

‘However, at least inflation appears to have stabilised and isn’t getting worse. And crucially, sales are rising strongly, which is providing oxygen to help absorb cost pressures.’

Greggs is also ploughing ahead with a store expansion programme, intending to have more than 3,000 UK shops sometime during the latter half of this decade. 

Having opened a record number of shops in 2022, it announced plans in March to launch 150 more outlets and trial 24-hour drive-thru locations this year.

So far this year, it has opened 63 new shops, including in Canary Wharf and at Cardiff and Glasgow airports. 

Greggs shares were 2.4 per cent lower at £27.76 on Tuesday morning, although they have grown by over a quarter in the past six months.