Greggs increased pricing on a variety of products, including its famed sausage rolls, this week, despite a 15% increase in revenue.
The company, which had previously warned of additional price increases this summer, stated that it could not rule out additional price increases but maintained its prediction for cost inflation.
Since the beginning of the year, the price of a Greggs sausage roll has increased by 9.5%, from £1.05 in January to £1.10 in May to £1.15 as of this week.
It cost 85p at the beginning of 2017, before increasing to 90p later in the year.
As a result of the escalating cost of raw materials, packaging, and energy, the company anticipates a 9% increase in expenses this year, which is unchanged from its August predictions.
Roisin Currie, the company’s chief executive, told Reuters, “We have implemented a minor number of price increases across our items as of yesterday.”
Customers have not been deterred by recent price rises of 5p or 10p on select items, as the retailer had previously announced.
In the past three months, total sales for Greggs increased by 15%. When excluding franchises, sales increased by 10%.
Similar-to-previous-year growth would have been 1 percentage point greater if the company had not closed its stores on September 19 for the Queen’s funeral, which reduced growth by 1 percentage point.
The bakery chain reported that August sales slowed due to the departure of British vacationers, but that momentum returned in September.
In a time of “severe” cost challenges, it noted, its “value-for-money” offering was “ever more vital” to customers.
‘Fortunately for Greggs, as expenses have increased, so have revenues,’ said Charlie Huggins, the head of equities at Wealth Club.
Gregg’s brand now touches more people than it did before the epidemic and is in excellent health. The organization can appreciate Piers Morgan’s dislike of vegan sausage buns as well as superb operational execution for this achievement.
The bakery firm has invested in the automation of pizza production and the expansion of its plant-based offerings, including the vegan bean & cheese toastie and the vegan southern fried chicken-free baguette, which are its most recent additions.
It continues to open new stores, including two ‘ drive-through’ shops in Amesbury and Durham and two at the Tottenham Hale and Liverpool Street train stations in London.
It aims to launch approximately 150 additional stores this year, of which approximately 40 percent will be franchised.
Greggs shares increased 10% to £19 in Tuesday morning trade, but are still down more than a third compared to this time last year.
Russ Mould, investment director at AJ Bell, compared today’s report to one of Greggs’s sausage rolls as comfort food for the company’s investors.
The corporation maintains its guidance despite consumer concerns and quickly rising prices.
Greggs’s concept will be put to the test in the coming months.
Will individuals view it as an affordable alternative? Or will consumer expenditures be so constrained that sales decrease? The challenge is to continue selling things at appealing pricing without surrendering too much profit margin.
