Greggs sales up 7.5% as breakfast demand grows

Demand for Greggs’ £2 breakfast offer has helped drive a 7.5% hike in sales across the business.

The company, which operates around 1,800 retail outlets across the UK, reported the increase in a trading update for the 19 weeks to 13 May 2017, and also announced like-for-like sales in company-managed shops had grown 3.6% over the same period.

“Customers increasingly recognise the quality and value of our £2 breakfast offer and we have invested further in capacity to meet this growing demand,” said the business.

Greggs added that sales of its Balanced Choice line-up continue to grow, and that it had expanded the range with lines including cold-pressed juice drinks and freshly-prepared salads and wraps.

The business also reported that it had concluded the consultation process with staff affected by the previously announced consolidation of its sweet bakery manufacturing operations.

Declining to state how many jobs had been lost in the restructure, Greggs CEO Roger Whiteside said all resulting redundancies had been voluntary.

He added that the first of the new production lines would be going on stream next month, producing yum yums from Greggs' Clydesmill factory in Cambuslang, Scotland.

“We now have a basis on which to commence the investment programme that will support further growth in shop numbers and improved quality and efficiency in manufacturing,” Greggs stated in its trading update.

The business has continued its focus on food-to-go locations with its shop openings, completing 87 refurbishments and opening 42 new shops, including 20 franchised units. Greggs closed 14 shops, giving a total of 1,792 shops at 13 May - 1,615 company-managed shops and 177 franchised units.

Whiteside said the business was continuing to trial a delivery service to workplaces and learn about the operation challenges involved in this, and said there were no plans to roll the service out this year. The business is also considering a click and collect service for consumers.

Progress and investment in systems and supply chain was continuing, added the company.

“Central forecasting and replenishment is now operating in half of our shop estate, replacing the traditional ordering process,” it reported. “Initial signs are good - the system is popular with staff and is delivering improved product availability.”

Greggs admitted sales outlook remained uncertain in the context of slowing growth in disposable incomes, and that input cost inflation was having “modest impact” on margins.

“However we have increasing visibility of costs for the second half and anticipate this pressure to ease towards the end of the year,” it added. “Whilst this pattern will constrain profit growth in the first half of the year we expect to make progress in line with our previous expectations for the year as a whole.”

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