Greggs has made “further good progress” in its third quarter with cost inflation easing preventing the need to raise current prices.
In its Q3 trading update for the 13 weeks to 28 September 2024, the bakery chain reported that total revenue was up 10.6% with like-for-like sales in company-managed shops rising by 5% compared to the same period last year. Growth had been supported by menu development, extended trading hours, and new digital channels, it noted.
Greggs also continued expanding its estate with 86 net new shops opened so far this year, which kept it on track to hit its 2024 target of adding at least 140 outlets. As of 28 September, it has a total of 2,559 shops in operation across the UK.
However, the 5% like-for-like sales increase during Q3 indicated a slowdown from the 7.4% growth recorded in both the first quarter and first half.
In a media call, Greggs CEO Roisin Currie revealed the “slightly softer” sales seen over the summer was due to a mix of reasons including damp weather, anti-immigration riots, and uncertainty in the economy surrounding the general election. “We’ve seen a stronger September, which is really pleasing for us,” she added.
Increased forward buying cover, meanwhile, has Greggs expecting the overall level of cost inflation for 2024 to be towards the lower end of the 4-5% range it previously communicated.
Currie noted that labour was now the biggest cost inflation factor for the company. “We’re just waiting to understand what comes out from the Low Pay Commission,” she said. “That obviously then goes into the 2025 numbers, where we will deliver our wage increase for all of our colleagues, so there are no current plans for any further price rises.”
In its Autumn 2024 menu, Greggs debuted an All-Day Breakfast Baguette, Mexican Bean & Spicy Cheese Flatbread, and Pumpkin Spice Doughnut, as well as a smaller pizza box (four-slice), which was said to have performed particularly well since launching.
Currie also pointed to an uptick in downloads and usage of the Greggs app, which helps drive frequency. As well as the standard offer of a free item after every ninth purchase, there were also some “surprise and delight” features such as double stamps for customers shopping after 5pm.
Delivery partnerships with Just Eat and more recently Uber Eats saw them opening new catchment areas, while extensions of shop closing times was proving a good opportunity to boost delivery sales too. “We’ll continue to find ways to stretch in the right locations,” asserted Currie, highlighting a particular focus on key travel locations and retail parks – London Bridge train station, for example, now stays open till 1am.
Supporting the ambitious growth plans at Greggs are investments in its supply chain including recently completed redevelopment of its Birmingham and extension of its Amesbury distribution centres. Construction of its new frozen manufacturing and logistics facility in Derby is progressing in line with a site opening in 2026, while land purchase of the new chilled and ambient national distribution centre in Kettering was expected to be completed later this year ahead of the planned opening in H1 2027.
The Board’s expectations for the full year outcome remained in line with its previous expectations. “We’re pleased with the progress, continue to have lots to do, and we’re excited going into the golden quarter,” concluded Currie.
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