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Greggs’ boss has expressed confidence that the British bakery and fast-food chain will sustain an improvement in sales growth after being boosted by warm spring weather and a viral social media campaign for its new Mac and Cheese dish.
The maker of pasties and sausage rolls reported a 2.9 per cent increase in like-for-like sales in the first 20 weeks of the year, pushing its shares up almost 9 per cent amid optimism about a rebound in UK consumer spending.
Sales growth improved from a modest 1.7 per cent increase in the first nine weeks, when Greggs had to contend with a “tough” economic backdrop as consumers faced a cost of living crisis. It was also hit by rises in national insurance contributions and the minimum wage.
Roisin Currie, chief executive of Greggs, said warm spring weather had encouraged people to go out shopping and that it felt like sentiment was improving even as consumers remained cautious.
“Customers are still nervous. [But] early spring has got people out and about for shopping,” she told the Financial Times. “The consumer goes out more, whether that’s to the high streets, to the retail parks, [or] to buy spring clothes,” she said.
Shares in Greggs gained as much as 8.9 per cent on Tuesday to reach their highest level since February.
“It feels as if everything is improving,” Currie said.
The Newcastle-based company said growth was being supported by the expansion of its menu, such as the introduction of Mac and Cheese, chicken burgers and fish finger sandwiches, as well as longer trading hours.
In addition to new recipes for sandwiches, customers have been especially keen on the new macaroni cheese dish, which went viral on TikTok, Currie said.
“We launched Mac and Cheese earlier this year, and our customers are loving it. So we are trying to roll that product out at pace just now,” she said, adding that the Greggs’ product team had spotted its Korean-style slaw trending on social media.
But some analysts remained cautious.
Analysts at Barclays said in a note that Greggs had benefited from better weather together with its peers, and that “this is not a trend we would like to chase too hard”. Clive Black, from Shore Capital, said he would “welcome a step back” in the company’s capital expenditure.
