Bakery chain Greggs has its sights set on a massive expansion of its sausage roll and baked goods empire, with plans to open up to 150 new bakeries this year.
And it is not content to stop there, despite warning of rising costs.
The company said there is a “clear opportunity for significantly more than 3,000 UK shops in time”. Greggs, which already trades from more than 2,300 shops and outlets, aims to open more branches in airports, train stations, supermarkets and shopping centres.
It also plans to extend the opening hours of some outlets and hopes to test consumers’ appetite for 24-hour drive-throughs.
At least 500 sites already stay open until 8pm – 300 shops will be extended to 9pm.
The plans come after Greggs reported profits of £148.3m, up 9 per cent, last year.
Roisin Currie, chief executive, said the expansion would make Greggs “more accessible to even more customers”.
“Customers are seeking out value and therefore they’re coming to Greggs. Although consumer incomes remain under pressure, Greggs continues to offer exceptional value to people looking for great tasting, high-quality food and drink on-the-go,” she said.
Its app, which gives users their 10th product free, is attracting customers looking for savings, she added, while extending opening hours is also boosting sales. But she said profits were pegged back by rises in the cost of ingredients, energy and labour.
Greggs said it expects cost inflation this year to be between 9 per cent and 10 per cent, with higher wages expected to be one of its biggest challenges.
Russ Mould, AJ Bell’s investment director, said: “With the best will in the world and even when household budgets are under real pressure, sometimes people are just too busy to make sandwiches. There is always going to be a place for food-on-the-go venues and Greggs’s offering is perfectly pitched in the current environment.
“Cheap, hot, filling food is just what people are looking for and as the company continues to roll out new stores, there are a growing number of outlets where people can snap up these products. By introducing a range of plant-based items, like its vegan sausage roll, Greggs has demonstrated an ability to stay on top of shifting attitudes and appetites, and win new customers over to the brand. Later openings for a large chunk of its stores should help growth, as will delivery and click and collect orders.
“There is no lack of ambition on Greggs’s part, with plans to get to more than 3,000 shops from the current number of just more than 2,300. While this is to be applauded, Greggs needs to be careful ambition does not tip over into hubris. Will the brand still be as popular, for example, when economic conditions have improved and people have a bit more money in their pocket?”
Victoria Scholar Greggs, investment head at interactive investor, said: “Greggs reported robust sales as demand from on-the-go workers for its low price point offering of sausage rolls, coffees and other drinks and snacks proved to be resilient amid the challenging backdrop of a weak consumer and slow economic growth.
“However, cost inflation of 9 per cent weighed on its bottom line with pressures from rising energy bills, ingredients, and labour costs. The UK bakery warned that cost inflation will continue to be a challenge in the year ahead.”