The bakery chain Greggs has said it will increase the price of its breakfast deal and a number of other products this week after unusually hot weather hit sales over the summer.
The group said its three-part offer, which includes breakfast roll or baguette, a hot drink, and a side, would rise in price from £3.95 to £4.15. The two-part deal, which includes a main item and a drink, will rise from £2.95 to £3.15.
Its chief executive, Roisin Currie, said while the company tried to keep prices as low as possible, it was navigating an inflationary environment.
“The price rises that will be landing tomorrow, it’s 5p on a few products and our breakfast deal will go up … A number of our other items will be protected and will not move.” She said Greggs had not raised prices since May.
The bakery chain reported a 1.5% like-for-like increase in sales in its third quarter, a slowdown from the 2.6% growth it reported in the first half of the year, which it blamed on July’s heatwave putting shoppers off hot pastries.
Alex Smith of the research company Third Bridge said Greggs could no longer rely on sales volumes alone to absorb cost inflation.
“National insurance increases and new employment regulations are pushing up operating expenses, and management may have to lean on tiered price increases across popular categories to protect margins,” he said.
“This strategy may work in the short term but it carries risks if price sensitivity among its core customers intensifies in the months ahead.”
Earlier this year Greggs increased the price of its sausage rolls by 5p to £1.30, blaming wage, tax and food cost rises. The move formed part of an average 4% price rise on key items including coffee and doughnuts.
The company said at the time that it had no choice but to pass on the rising cost of its wage bill to consumers, after two-thirds of its workers received a 6.1% pay rise in January.
Currie added that consumer confidence was still fragile, with many people saving their disposable income rather than spending.
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Shares in Greggs, which is headquartered in Newcastle upon Tyne and has 2,675 shops across the UK, rose by as much as 7% in early trading on Wednesday morning, putting it at the top of the FTSE 250’s best performers.
However, its stock has dropped by about 40% this year as investors worry that the high street has reached “peak Greggs”.
The chain directly manages 2,096 shops, while 579 are franchised. Greggs said it has opened 57 net new shops this year and expects about 120 net new openings by the end of the year. This is lower than its previous target of up to 150 net new shops, which it said reflected “the timing of opportunities”.
