Greggs has reported own shop like-for-like sales up 5.9% for the 26 weeks to 4 July with total sales up 6.4% to £398m.
The company recorded a pre-tax profit of £25.6m for the period, in which 118 refits and 12 café conversions completed
Chief executive Roger Whiteside said: “We have had a strong first half with good growth in sales reflecting improvements in our products and the reaction to our shop investment programme. Our offer of great tasting food-on-the-go is being well received by the consumer in market conditions that have remained favourable. In particular we have seen significant growth in breakfast sales as well as from the extension of our Balanced Choice range of sandwiches and flatbreads with fewer than 400 calories.
“With the shop refurbishment programme continuing to progress well and new additions to the product range including pizza slices, we are confident of delivering a year of good growth slightly ahead of our previous expectations.”
The company said all its food-on-the-go categories delivered like-for-like growth in the first half with sandwiches in particular benefiting from the range relaunch in June last year.
It added: “Breakfast continues to be our fastest growing part of the day and we have successfully extended our breakfast menu, adding new porridge and breakfast sandwich options. These include a free-range egg option that has attracted the “Good Egg Award”.
“We continue to invest in the value of our food and drinks, and now offer “any savoury product plus a drink” for £2. This has quickly established itself alongside our £2 “sweet and drink” offer as a favourite with customers.”
Three quarters of stores are now open by 7am and more than two thirds open on Sundays.
During the first 26 weeks the company completed 118 shop refurbishments to its latest “bakery food-on-the-go” format and has commenced the conversion of the larger bakery cafés, with 12 completed in the first half. It said this was in line with the plan to update 200 to 220 shops during 2015.
Overall 44 new shops were opened (including 25 franchise units) and 30 closed, giving a total of 1,664 shops (of which 70 are franchise units) trading at 4 July 2015. It expects shop numbers for the full year to increase by a net 20-30 shops overall.
The company said the first half result benefited from the restructuring of the in-store bakeries and support operations carried out in 2014. The year-on-year benefit of this was £2.4 million and a further £0.6 million benefit will accrue in the second half of 2015 as the impact of this annualises fully.
The company added: “Our other ongoing structural cost reduction plans are progressing well and are on track to save £5-6 million in the year as a whole. Better processes around procurement and product management have delivered lower costs and reduced waste and we continue to consolidate production activity by focusing on centres of excellence in our supply chain.
On the National Living Wage, the company said: “The proposed increases to the minimum wage are likely to drive inflationary pressure in the broader sector over the coming years. We have consistently paid rates of pay above this level, with our standard rate for hourly-paid shop staff at £7.11, currently nine per cent higher than the national minimum wage. We are assessing the medium-term impact of further increases on our business.”
