S Poddar
Greggs reported its lowest rate of sales growth since the pandemic, attributing it to bad weather early in 2025 and a visible change in the way consumers spend their money. The UK’s biggest bakery chain’s shares fell close to 12% on Tuesday after it announced that like-for-like sales had risen by only 1.7% in the nine weeks since late December. This is yet another slowdown from the last quarter, when growth had already decelerated to 2.5%.
Part of the decline, the company credited to bad weather, especially during January, as heavy snows and ice plagued northern England. Red storm alerts prompted the 250 temporary closing of stores in Scotland and Northern Ireland. Nonetheless, Greggs is confident about coping with inflationary pressures in the current year.
Chief Executive Roisin Currie admitted that consumer confidence could also be behind the slowdown in sales. Despite real wage growth in the UK, many consumers seem to be opting to save rather than spend. Her remarks come in line with analysis from Kantar analysts that discovered Brits reduced their snack intake substantially in 2024, eating 330 million fewer portions of snacks than in 2020—a drop of nearly 14%.
It is health awareness that has been the cause of this trend, though increasing living expenses and lifestyle adjustments after the pandemic cannot be ruled out. Yet Currie insisted that Greggs’ snack business is still going well, with its new additions like flapjacks being bestsellers. The firm has been extending its healthier offerings like fruit pots and salads to suit changing tastes in the face of growing consumer preferences.
To the future, Currie believes the spending might turn around in April when the rising minimum wage would help lift a lot of homes. Irrespective of this recent moderation, Greggs stands by its longer-term expansion model. It presently has over 2,500 outlets and intends to pass the 3,000 threshold, which are huge plans by most standards. The growth driver from one angle is its evening offer, where demand has risen—in an area of the market traditionally underpacing the brand.
The slowdown in sales growth happened around the time that Greggs put up prices, including raising its iconic sausage rolls by 5p. The company did this because it was experiencing rising costs, especially in wages. The majority of Greggs’ employees were given a 6.1% pay rise at the beginning of the year, leading the company to transfer some of these costs on to customers.
Currie supported the price increases, stressing that they were required to ensure money in the bank while still investing in staff and business expansion. She reiterated Greggs’ more extensive vision, saying, “In 2021 we focused on doubling sales by 2026 and a much larger business in the long term. Three years into our five-year plan, sales are on track, and we remain assured in the growth opportunity before us.”
In spite of recent difficulties, Greggs is in robust financial health. The business will pay a record £20.5 million profit-sharing bonus to 80% of its 33,000 staff after posting more than £2 billion in yearly sales for the first time. Pre-tax profits increased by 8.3% to almost £204 million in the period up to 28 December, driven by an 11.3% growth in total sales.
But some analysts warn that Greggs could encounter challenges in maintaining its pace. Julie Palmer, a Begbies Traynor partner, said that falling high street footfall and challenges in acquiring prime sites for new stores could be challenges. She said, “The value proposition of the company is still robust, but it has a battle on its hands to hold on to margins when the rise to the national living wage and employers’ national insurance contributions will make costs jump by 6% this year.”
In the meantime, food inflation has held firm at 3.3%, Kantar says. This comes after a period of inflationary cost pressures fueled by higher prices for commodities like cocoa, coffee, and dairy, as well as rising wage costs for food manufacturers and retailers. Supermarket sales increased by 3.2%, lagging behind inflation. Of the big supermarket groups, Marks & Spencer was the fastest-growing, followed by Lidl, while Asda was the sole big retailer to experience a fall, with sales falling by 5%.
While Greggs has faced short-term challenges, its management is upbeat about the future. By sticking to its pattern of evolving according to shifting customer trends and widening its footprint in underpenetrated market spaces, the business is confident of its long-term prospects.
