Greggs warns of rising costs and shortages as it reports bigger sales

Bakery chain says it has no plans to put up prices despite staffing and supply chain disruption

Last modified on Tue 5 Oct 2021 04.58 EDT

Britain’s biggest bakery chain, Greggs, has warned of staff and ingredient shortages and said costs would rise this year, as it reported higher sales for the past three months.

The company – known for its sausage rolls, steak bakes and vegan snacks – said like-for-like sales rose 3.5% in the three months to 2 October, compared with pre-pandemic levels, despite staffing and supply chain disruption.

Greggs said while it had some short-term protection from cost increases after stockpiling ingredients, it expected them to increase in the coming months and into 2022. However, it had no immediate plans to raise its prices, it added.

The Greggs chief executive, Roger Whiteside, told Reuters: “The sausage roll is safe, that’s one thing we haven’t gone short of.”

The bakery chain said it had been affected by the nationwide shortage of HGV drivers. An acute shortage of truck and tanker drivers has led to a petrol supply crisis and many supermarket shelves remain empty.

Boris Johnson said on Tuesday that only 127 foreign lorry drivers had so far applied for temporary work visas. The government is offering 300 visas to overseas fuel drivers immediately, allowing them to work in the UK until the end of March. Overall, the government is offering 5,000 temporary visas to truck drivers as it tries to ease the shortage.

Julie Palmer, a partner at the business recovery firm Begbies Traynor, said: “Like many businesses, Greggs now faces the harsh bite of the supply chain crises. However, the baker may have been more prepared than most competitors as it stockpiled ingredients and equipment from 2019; its early actions may have seemed extreme at the time but will now help it shake off some supply chain challenges others are facing.”

Greggs’s sales growth was particularly strong in August when many people holidayed in the UK rather than heading abroad, and remained positive in September, with a like-for-like increase of 3% in the four weeks to 2 October. As a result, Greggs expects to exceed profit forecasts for this year.

It has also set a target of doubling turnover over the next five years to £2.4bn in 2026 and aims to have 3,000 shops, compared with 2,146 at present. It expects about 100 openings this year, which will rise to 150 every year from 2022. With roughly 10 staff per shop, this means it will be hiring about 1,500 people next year.

Shares rose 4% on Tuesday morning, making Greggs the top riser on the FTSE 250.

Greggs has expanded home delivery, available at 943 shops, and is extending opening hours to 8pm at many outlets, where it lags rivals.

It said vegan ranges had been popular, such as the sausage breakfast roll, and its autumn menu featured pumpkin spiced latte as well as spooky bats and buns for Halloween.

Greggs has opened three drive-through shops and its first outlet in Canary Wharf, London’s financial district.

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