Greggs plan to open new stores despite supply chain issues

Greggs plan to open new stores despite supply chain issues

Greggs releases their third quarter trading update. The report is positive overall, with continued recovery from the effects of the pandemic. Greggs’ showcases increasing potential for growth with its food-to-go options.

Highlights:

  • Two-year LFL for third quarter up 3.5% despite staffing and supply chain disruption
  • Delivery sales developing well, 943 shops now involved
  • 68 net new shops opened year-to-date (84 openings less 16 closures)
  • Continue to expect around 100 net shop openings in 2021
  • Broadening of vegan-friendly food and drink options well received
  • Inflationary pressures rising towards end of 2021
  • Expect full year outcome to be ahead of previous expectations

The broadening of Gregg’s vegan-friendly food and drink options has been well received, notably the limited edition ‘Vegan Sausage, Bean & Cheeze Melt’ along with a ‘Vegan Ham & Cheeze Baguette’ and a vegan-friendly breakfast sausage. Pizza and savoury boxes are supporting the delivery channel and our autumn menu is now available in shops, featuring favourites such as pumpkin spiced latte and spooky bats and buns for Halloween.

Ross Hindle, Analyst at Third Bridge commented on Greggs’ results: “Greggs two-year LFL Q3 sales were up 3.5% despite labour and supply chain challenges. The overall UK food-to-go market remains depressed by around 15%-20% as the UK’s new found appetite for working at home keeps commuter volumes in check. Greggs has been able to punch above its weight in this climate because of its low pricing, wide-appeal marketing, and shops outside city centres. 

“Greggs has turned up the heat on the food-to-go sector with its launch of new vegan products and its punchy plan for additional store openings. The Group has opened 68 stores year-to-date (net of store closures) with management continuing to expect the Group to open 100 stores by year end.

“Supply chain issues and labour shortages remain a key risk for Greggs with no end in sight. Temporary interruptions for some ingredients could result in the Group reducing its range and would hamper current momentum.

“From a pricing point of view, Greggs chose to pass on the Chancellor’s VAT discount to their customers. They now face the tricky challenge of putting their prices back up when VAT increases to 12.5% at the end of September, and 20% in 2022. This may mean short-term margin pressure for the Group especially in the face of rising inflation.”

 

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Media contact

Kiran Grewal
Editor, International Bakery

Tel: +44 (0) 1622 823 922
Email: editor@in-bakery.com

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