Feeling the bite: is Greggs on a roll or is its expansion overbaked? | Greggs

A.An enormous pastry carpet snakes around the factory. Four large metal jars of meat filling are waiting to be added. Workers wearing hairnets and overalls buzz around, controlling a production line that can hold 4.5 tons of pastries at a time.

This is industrial-scale food production designed to satisfy the UK’s seemingly insatiable appetite for hot dogs, vegan snacks and other cooked foods.

Every sausage roll or steak purchased from any of Greggs’ 2,675 outlets in the UK will be produced and frozen at this facility in the company’s home city of Newcastle upon Tyne, then cooked in store and served, possibly hundreds of miles away.

The scale may seem sufficient to meet demand, with bags of flour weighing 16.5kg and brick-sized blocks of oil and margarine being transported by forklift truck, but the bakery chain continues to expand production.

The Newcastle facility, which mass produces the equivalent of 1 million sausage rolls every day, will have a fourth production line in 2024. Greggs is now set to open an automated production facility in Derby, followed by another in Kettering, Northamptonshire, in 2027. Estimated capital expenditure in 2025 was £300 million.

The new factories are intended to help the company reach its target of 3,500 stores across the UK, which is 800 more than the number it currently operates.

After years of rapid expansion, Greggs’ determination to continue opening new branches even as comparable sales have fallen has raised doubts among analysts and investors.

This, along with the decline in the company’s share price over the past year, has led some to ask: has the UK reached the limit of its appetite for Greggs?

Greggs chief executive Roisin Currie claimed otherwise in July. “I certainly don’t believe we’ve reached peak Greggs,” he said, adding that the company had rebounded from “crises” before.

But others have their doubts. Analysts at broker Panmure Liberum said the chain was now “at a crossroads”.

Greggs is still remembered with special respect by people in his hometown. When the Guardian visited the branch at Newcastle railway station on a crisp December morning, customers were queuing outside the door. The same was true in the store outside the station.

Expecting breakfast sandwiches and coffee were Fiona Wilson and Keith Stewart.

“It’s a very good quality coffee at a reasonable price,” Stewart said. Demonstrating the loyalty app and explaining that he usually visits two or three times a week, Wilson added: “I love the products and I love that it’s a local brand.”

What would become Britain’s largest bakery chain started with one man and a dream. In 1939 John Gregg began delivering fresh eggs and yeast by bicycle to families in Newcastle. Just over a decade later it opened its first store selling bread and baked goods in the Gosforth area of ​​the city, where the high street still hosts a branch of Greggs.

Gregg could not have predicted that the company that bears his name would balloon in the coming years, employing 33,000 people from Elgin in Scotland to Truro in Cornwall.

The chain expanded in the 70s and 80s under the control of Gregg’s sons by acquiring regional bakery chains. Its most recent transformation took place in the 2010s, when Currie’s predecessor, then-CEO Roger Whiteside, made the decision. abandon traditional products like loaves Focusing on the prepared food market.

The pivot was a success and the chain gained a reputation for cheap and reliable breakfasts and lunches, with its logo of four orange squares on a blue background appearing on more and more high streets.

It reached the £1bn milestone in annual sales in 2018 and launched its vegan sausage roll the following year, which won and became a phenomenon. kudos for cheerful social media marketing.

In the early 2020s, despite the pandemic, breadless Greggs were doing well. Currie followed in Whiteside’s footsteps, offering menu items such as pizza and macaroni and cheese.

The company was profiled behind the scenes TV documentary and has collaborated with other brands, including affordable clothing chain Primark, which launched Greggs’ discounted “festival clothing” range.

Sales continued to grow like puff pastry baking in a hot oven, and by 2024 Greggs had doubled its annual turnover to £2bn and opened its 2,600th branch. At the same time, shares of the FTSE 250 company, which first went public in 1984, were mostly bullish.

The year Greggs faltered was 2025.

Initially bosses blamed winter weather for the company’s worst sales growth since the pandemic. A summer of warm weather and sunshine has dampened customers’ appetite for pastries, causing analysts and investors to question the brand’s direction as it continues to target 120 net store openings in 2025.

Greggs’ share price fell nearly 40% last year and finished 2025 as the most shorted stock in the UK as people bet its value would fall further.

An activist investor (Singapore-based hedge fund Lauro Asset Management) recently criticized the company’s management and urged it to cut costs to avoid becoming a takeover target.

Others wonder whether the chain can sustain growth through new branch openings; this can easily be moved if they prove to be too close to existing customers.

Restaurant consultant Peter Backman drew a comparison with rival chain Subway, which he said has “about 2,000” branches, “so Greggs is probably close to the limit”.

He added: “It will take a few years for them to reach the maximum number of stores. But there are other problems and the number of people visiting their stores is unlikely to increase.”

Expansion abroad seems unlikely, given Britain’s proposal. The previous five-year attempt to woo Belgian consumers failed and chain “Engelse Bakker” (British baker) closed its stores In 2008.

Despite the cooling of inflation, consumers’ sensitivity to price increases continues. A sausage roll has now doubled from 66p in 2012 to £1.30 in Newcastle city centre, although prices may vary depending on location.

Greggs has raised prices “ahead of the market”, according to analysts at broker Jefferies. It found that the cost of the chain’s sandwiches in October 2025 was 6% higher than a year earlier, while key hot items were 4.5% more expensive; but concluded that “prices are still high.”

Although the company offers healthier options, including fruit bowls and salads, others have questioned whether more widespread use of weight-loss shots could further reduce sales of calorie-laden pastries.

At a time when some believe it needs to focus on its core business, Greggs continues to trial new formats, such as smaller stores in high footfall locations. The first of these is “Bitesize Greggs” It opened at Sevenoaks railway station in November.

Before Christmas, the chain opened its annual pop-up venue, this time a “Greggs pub” inside Newcastle’s Fenwick store. Despite the rather steep prices (£12.50 for steak served with eggs, chips and tomato), the Golden Flake Tavern is packed with customers eager to sample Greggs’ best-known products in a traditional-looking drink.

Naomi Watson and her mum described the pop-up platters of sausage rolls, gravy and mash (£9) and macaroni and cheese bites (£4.25) as “very good”. Although they wouldn’t generally describe themselves as “Greggs people” given the “lack of salad” on offer, the pair thought a visit to the pub would be a “fun day out”.

Greggs will announce on January 8 how many cakes and mince pies it sold in the last quarter. Dan Coatsworth, head of markets at broker AJ Bell, said the announcement could be crucial to the company’s future direction.

“Greggs is at a major strategic turning point and bosses need to do something,” he said. “Betting the drum saying nothing is wrong is not cutting the mustard. What’s wrong with doing what you’re doing now and doing it really well?”