Greggs to open 150 new stores despite rising staff and energy costs

theguardian.com:

Greggs has said higher wage and energy bills are weighing on profits, but Britain’s biggest bakery chain is pushing ahead with 150 new store openings this year.

The company, known for its sausage rolls and steak bakes, said costs rose by 9% last year and would continue to be a challenge in the year ahead.

Greggs expects cost inflation of between 9% and 10% in 2023, despite the Bank of England’s prediction that inflation across the UK will fall quickly this year.

Last year, sales jumped 23% to £1.5bn compared with 2021, while pre-tax profit rose by just 1.9% to £148m. Earnings were held back by the rising cost of food ingredients such as wheat, energy, and labour, which prompted Greggs to raise its prices earlier than planned.

Food and packaging costs have risen sharply since Russia’s invasion of Ukraine in late February 2022 led to a spike in commodity prices.

Wage growth at Greggs was 4.9% in 2022 and is expected to go up to 8% this year.

Government support to businesses to help with spiralling energy prices will be cut from the end of March. Greggs said it had “passed on necessary price increases in response to cost inflation”.

The group opened 147 new shops on a net basis last year, for example in retail parks and central London, as well as Birmingham and Liverpool airports, taking the total to 2,328. It plans 150 new openings this year as it aims for more than 3,000 UK shops.

It has extended opening hours to draw in commuters on their way home from work and is doing more evening deliveries, with 500 shops open until at least 8pm. Pizza sales and chicken goujons are selling well, and Greggs has also expanded its vegan range.

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