The UK's favourite bakery chain, Greggs, has been forced to increase prices on some of its most popular items, including its iconic sausage roll, as it navigates a challenging economic climate. The move reflects the ongoing pressure on the high street from rising wage bills, energy costs, and packaging expenses.
Targeted Price Rises Hit Core Menu Items
In a targeted response to mounting costs, Greggs has added 5p to the price of a sausage roll, taking it to £1.35 in most shops. The price of a latte has also risen by 10p, now costing customers £2.25. The company stated it has no immediate plans for further increases and hopes that broader inflation will ease throughout the year.
Chief Executive Roisin Currie addressed the situation, highlighting the difficult trading environment. "It has been a very tough, challenging market last year," she said, noting that subdued consumer confidence and extreme weather had impacted the crucial food-to-go sector. She confirmed the firm is taking a "cautious outlook" as households see their disposable income squeezed.
Sales Growth Slows Amid Consumer Pressure
The financial impact of this difficult period was clear in the company's latest trading update. While total annual sales grew 6.8% to £2.15bn, this was supported by the opening of 207 new outlets. More telling was the performance in established shops, where like-for-like sales rose by just 2.9% in the final quarter of the year, a figure largely driven by these price increases rather than higher customer traffic.
This news prompted a sharp reaction from investors, with shares in Greggs sliding by more than 8% following the announcement. The company expects annual profits to be around £173m for the year to 27 December, a decline of approximately £17m, and warned that profits for the year ahead are not expected to grow.
Pay Talks and a Hope for Respite
Looking forward, Currie said the business is monitoring how inflation evolves as it enters into negotiations for a pay rise for its workers this year. On a slightly positive note, she indicated that easing inflation should provide some relief. "It will give a bit of respite to the consumer that’s probably got a bit fatigued [with inflation] over the past few years," she stated.
The chain remains committed to expansion but at a moderated pace, planning to open 120 new stores in the coming year, which is fewer than initially hoped. As one of the bellwethers of the UK high street, Greggs's pricing strategy and cautious commentary underscore the persistent challenges facing the retail and food-to-go industry as the cost-of-living crisis continues to influence consumer behaviour.
