Business

Greggs warns of rising costs as sales bounce back from pandemic

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FOOD-to-go chain Greggs has warned of increasing costs but said nothing further about whether it might push up prices for customers.

In an update to shareholders the company said that costs had been increasing across the market.

It also said customers will be feeling the squeeze from the rising cost of living, something that could cause them to tighten their belts.

Ross Hindle, an analyst at Third Bridge, said: "The big unknown is how consumers react to the rising costs and tightening of wallets. It is believed that there is an opportunity for Greggs to gain market share from 'posh' coffee shops and more expensive food-to-go operators as Britons cut back on their mealtime and beverage spend.

"However, balancing market share opportunities with margin protection is likely to be a big challenge for Greggs.

"The group will struggle to increase prices while still maintaining its value-for-money proposition in the market. Savoury and breakfast products are the most likely to be priced higher."

He added: "Eighty per cent of Greggs' range is manufactured in-house, providing some flexibility in how the group navigates inflationary pressure. However, it will still face intense cost headwinds."

In March, the business warned that changes to taxes and higher costs for energy, food and staff would push up its costs between 6 per cent and 7 per cent.

Prices that it charges customers already went up in the early part of 2022, and the firm said in March that it expects more changes this year.

On Monday, Greggs said that like-for-like sales at the shops it manages rose by more than 27 per cent in the first 19 weeks of this year, compared to 2021.

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