Greggs puts up price of sausage roll by 5p to £1.35 amid rising costs | Greggs
Greggs has added 5p to the price of its sausage roll and 10p to its coffee latte as it pivots to some of its best-selling products to offset rising wage, energy and packaging costs.
Britain’s largest bakery chain said it had no plans to make further price increases at the moment and expected inflation to fall this year, admitting it was selling fewer products in the run-up to Christmas in a “very tough, challenging market”.
The “targeted” increases mean the price of a sausage roll in most stores has risen from £1.30 a year ago to now £1.35, while the price of a latte will rise 10p to £2.25.
Roisin Currie, chief executive of Greggs, said the company was “watching the market” to see how inflation would develop during pay rise negotiations for workers this year.
He said the company believed it could see a slight reduction in the cost of business rates as a result of changes to property tax in the budget and that it had “done a lot to lift costs and combat inflation”.
Shares in Greggs were down nearly 9% on Thursday morning as the company said sales at its established stores managed by the company rose just 2.9% in the three months to December 27, with the growth driven by price rises.
“The decline in consumer confidence continued to affect the ready-made food market, as did the extreme weather conditions at the beginning of the year,” the company said in its statement to the stock exchange.
The tough end to the year meant total annual sales rose 6.8% to £2.15 billion, with Greggs opening 207 stores and closing or moving 86 stores. The company said it expects to meet profit expectations for the year to December 27, down nearly £17 million year on year to £173 million.
It also warned that profits were not expected to rise for next year as it plans to open 120 new stores; this number was less than expected under ongoing expansion plans.
Currie said: “It was a very challenging and challenging market last year. It’s not just about the high street. If you look at consumer behavior and how much pressure they operate under, I think it’s a difficult market to operate in.”
He said household disposable income was shrinking and consumers were choosing to save rather than spend if they had money to spare, so Greggs was “taking a cautious view”.
Currie said inflation had eased and was expected to be lower than it had been for several years, which was good news for consumers. He said the slowdown in price increases “will probably provide some respite to the consumer who is a little bit tired.” [with inflation] in the last few years”.
