Greggs has increased prices for the second time this year, despite attempts by the bakery chain to mitigate the impact of inflation on customers.
The retailer, which runs about 2,200 shops across the UK, reported £694.5mn in total sales in the first half of the year, up by 27.1 per cent compared with 2021 when Covid-19 restrictions shuttered stores.
But profits increased by just 0.5 per cent over the same period, with the chain blaming the reintroduction of business rates, an increase in value added tax and higher costs.
Greggs said it had increased prices again even though it had “worked hard to mitigate the impact of rising costs on customers”.
Cost inflation “increased significantly” in the first half “driven by food, packaging and energy commodities”, Greggs said. The company now predicts overall cost inflation of about 9 per cent in 2022.
However, the retailer said the small price increases it had made so far have not appeared to have affected sales.
Greggs said at the start of the year that it would add between 5p and 10p to prices. It had previously predicted that prices would rise by up to 7 per cent before announcing the latest increase on Tuesday.
In an attempt to limit further impact from inflation, the retailer has fixed production costs for food, packaging and energy for the next five months.
Despite fears over a consumer downturn, Greggs said it was pushing ahead with plans to expand its UK estate to as many as 3,000 shops.
The retailer opened 70 stores in the first half of the year and plans to open a further 80 by the end of the year, focusing on expanding its presence in retail parks, railway stations and central London. The retailer added that it could sustain a net increase of 150 shops a year beyond 2022.
“We are well positioned to navigate the widely publicised challenges affecting the economy and continue to have a number of exciting growth opportunities ahead, with a clear strategy for expansion,” said Roisin Currie, who took over as Greggs’ chief executive from industry veteran Roger Whiteside in May this year.
Greggs’ share price was up 2.2 per cent to £21.24 in early morning trading in London.
Currie added that Greggs’ “exceptional value” would help it succeed “in a market where consumer incomes are under pressure”.