Greggs has reported stronger trading in recent months, buoyed by viral popularity of its new Mac and Cheese product and the rollout of an expanded menu across hundreds of outlets.
The UK’s largest bakery chain said like-for-like sales rose 2.9% in the first 20 weeks of 2025, with momentum improving markedly over the past 11 weeks after a sluggish start to the year.
In its latest trading update, the high street favourite said total sales jumped 7.4% to £784 million, helped by both existing shop performance and 66 new store openings.
Investors welcomed the update, with shares rising more than 7% on Tuesday.
The bakery now operates 2,638 outlets and reiterated its goal of expanding its estate by up to 150 net new locations this year.
The company credited improved weather and a more favourable trading environment for the stronger numbers, noting that performance in the first nine weeks of the year had been its weakest since the pandemic, with like-for-like sales up just 1.9%.
That period was impacted by a combination of poor weather and macroeconomic headwinds.
Jefferies noted that improved like-for-like sales suggest volume pressures are easing, paving way for further growth in 2025.
Viral Mac and Cheese and expanding hot food menu support growth
Much of the recent sales boost has come from customer demand for newer offerings, with the company highlighting the success of its Mac and Cheese, which gained popularity on TikTok.
Other new menu items such as peach iced tea, mint lemonade, chicken goujons, and fish finger sandwiches have also resonated with customers.
Following a successful trial last year, Greggs said its made-to-order hot food range, which includes wraps and burgers, is now available in more than 300 stores nationwide.
Chief executive Roisin Currie said the product expansion and services like click-and-collect and delivery are central to the firm’s growth plans.
“As we broaden our offering and services, some of our older high street units are no longer suitable,” Currie said.
She confirmed that Greggs is shifting focus to larger shops, with some smaller locations closing as part of a realignment strategy.
Despite the positive trading update, Greggs noted that inflation remains a concern, maintaining its forecast of 6% cost growth for the year on a like-for-like basis.
The company said its plans to manage inflationary pressures are progressing and that full-year expectations remain unchanged.
Recovery promising but slow growth still concerning: should you buy?
While the share price rose on Tuesday, the stock remains down around 24% year-to-date.
John Moore, senior investment manager at RBC Brewin Dolphin, said:
“Recent price increases of around 2% suggest the company is trying to right-size in the aftermath of the National Insurance increases, recalibrating its roll out and growth ambitions.”
Dolphin said there are tentative signs that Greggs is making progress in today’s update, with sales continuing to rise, the shop portfolio growing, and expectations for the year unchanged.
“Slowing growth will still be a concern, as well as the wider question about whether we have reached ‘peak Greggs’ in the UK. Nevertheless, the baker is a resilient and innovative business that has proven its ability to bounce back from tricky times.”
Shore Capital analysts Clive Black and Darren Shirley said that Greggs continues to be in the middle of a material infrastructure development program which includes a manufacturing plant at Derby and a national distribution centre in Kettering.
The analysts describe Greggs as a “high quality firm, with a great brand, excellent management, a strong infrastructure and asset base plus a robust balance sheet”.
On the other hand, Stephen Wright from The Motley Fool UK pointed out that the P/E ratio of around 14 reflects some “unusually low expectations for Greggs at the moment”.
But even though the firm is clearly showing signs of recovering from a disappointing few months, Wright says there are better opportunities elsewhere at the moment.
“With rising costs and modest like-for-like sales growth, I’m looking elsewhere for stocks to buy right now.”
Shoplifting at Greggs causes losses in some areas, company takes steps
Separately, Greggs said it is taking steps to combat rising levels of shoplifting.
The company has begun removing sandwiches and drinks from self-service fridges and placing them behind counters in some stores.
Body-worn cameras are also being used as part of new security measures.
Currie acknowledged that thefts have caused “significant” losses in some areas, prompting the shift in store layout and additional security investments.
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