Greggs warns of rising costs

FAST food chain Greggs has warned of increasing costs and said customers should expect further price rises as a result.

In an update to shareholders the company said costs had been increasing across the market.

Roger Whiteside, who steps down as Greggs’ chief executive today, said the business is in the process of working out its latest potential price increases due to cost inflation.

“At the start of the year we made some increases and then, when the reduced rate of VAT went back to normal, we had to add that back onto prices where we’d been able to pass the reduction to customers during Covid,” he said.

“We are now going to have to make some increases again soon.

“It will be on selected items, but it will be across different areas, so there might be 5p or 10p increases on some products.”

Greggs also said customers will be feeling the squeeze from the rising cost of living, something that could cause them to tighten their belts.

One analyst said yesterday that this could ultimately help Greggs. As workers look for cheaper alternatives for lunch, the chain might attract new customers away from its rivals.

Ross Hindle, an analyst at Third Bridge, said: “The big unknown is how consumers react to the rising costs and tightening of wallets.

“It is believed that there is an opportunity for Greggs to gain market share from ‘posh’ coffee shops and more expensive food-to-go operators as Britons cut back on their mealtime and beverage spend.

“However, balancing market share opportunities with margin protection is likely to be a big challenge for Greggs.

“The group will struggle to increase prices while still maintaining its value-for-money proposition in the market.”