Greggs customers could face further price rises after the bakery chain warned that its costs would rise by 9% this year – four percentage points more than predicted at the start of 2022.
The company said cost inflation increased significantly in the first half of the year led by pricier food and packaging.
Greggs added 5p to 10p to the price of its products at the start of 2022 and raised prices again in May as it said the cost of ingredients was increasing. At the start of the year, the group predicted prices would rise by 5% and increased that to 7% in March before the latest rise.
Roisin Currie, the chief executive who took over from Roger Whiteside in May, said the group was keeping its prices under review, bearing in mind inflation and the actions of competitor chains. She said inflation was expected to remain high to the end of this year and likely into 2023 but Greggs’ shoppers were yet to make any significant changes to their behaviour.
“It is a tough market out there in terms of energy and food [prices] but we will work hard to protect our price leadership,” she said.
Fears of shortages of cereals and sunflower oil from Ukraine as well as petrochemicals from Russia have added to existing inflation caused by energy and fuel price rises, and a bounce-back in demand since pandemic restrictions eased in many parts of the world.
Sales at the chain rose by 27% to £694.5m in the six months to 2 July as shoppers returned to high streets after the loosening of Covid-related restrictions.
Rapid growth of Greggs’ evening meal options, such as pizza, were also a factor. However, pre-tax profits remained steady at £55.8m amid rising costs and the company said it continued to expect that profits would not rise for the year.
The retailer said it had fixed input prices for an average of five months across key areas as it tried to limit the effects of inflation.
Currie said Greggs had opened 70 shops in the first half of the year and anticipated opening 80 more by December.
“In a market where consumer incomes are under pressure, Greggs offers exceptional value for customers looking for food and drink on the go. We are well positioned to navigate the widely publicised challenges affecting the economy and continue to have a number of exciting growth opportunities ahead, with a clear strategy for expansion. We remain confident in Greggs’ ability to deliver continued success,” she said.
