Britain's favourite bakery chain, Greggs, has been forced to increase the price of its iconic sausage roll by five pence, pushing the cost to £1.35 in most shops. The move is part of a series of targeted price rises designed to counter soaring wage, energy, and packaging costs.
Targeted Price Rises Hit Popular Items
Alongside the 5p increase on the sausage roll, which previously cost £1.30, Greggs has added 10p to the price of a latte, taking it to £2.25. The company's chief executive, Roisin Currie, described the operating environment as a "very tough, challenging market", citing squeezed household budgets and subdued consumer confidence. She confirmed the firm has no immediate plans for further increases and expects inflationary pressures to ease this year.
The price adjustments come as Greggs reported a slowdown in sales growth in the crucial Christmas period. Like-for-like sales in company-managed shops rose by just 2.9% in the 13 weeks to 27 December, a figure largely driven by these higher prices rather than increased customer transactions.
Profits Under Pressure Amid Cautious Expansion
The challenging end to 2023 meant total annual sales grew 6.8% to £2.15 billion. The chain expanded its footprint significantly, opening 207 new outlets while closing or relocating 86 others. However, profits are feeling the strain. The company expects its annual pre-tax profit for the year to 27 December to be around £173 million, a decline of approximately £17 million from the previous year.
Looking ahead, Greggs struck a cautious note, warning that profits for the coming year are not expected to grow. This is despite plans to open 120 new stores across the UK, a number lower than its initial expansion ambitions. The announcement triggered a sharp reaction from investors, with shares falling by more than 8% on the day of the update.
Pay Talks and Future Outlook
CEO Roisin Currie highlighted that the company is closely monitoring inflation as it enters pay negotiations with its workforce this year. She expressed hope that a forecasted slowdown in price rises would "give a bit of respite to the consumer that’s probably got a bit fatigued [with inflation] over the past few years".
Currie also pointed to potential relief from a cut in business rates following changes to property tax, and emphasised the company is "doing a lot to try and remove costs" elsewhere in the business. The firm attributed part of the sales slowdown to extreme weather and ongoing pressure on the food-to-go market, as consumers with spare cash increasingly choose to save rather than spend.
