Greggs is seeking to expand its footprint in London with ten openings planned for this year, including a second opening in Canary Wharf following the success of its first.
Speaking on a conference call following its Q3 trading update, CEO Roisin Currie said the company expects c150 net shop openings this year and will continue to take advantage of lower rents.
“London is one of those cities that’s really busy even when it’s quiet,” she said. “We have gone into that market because of the lower rents. The footfall we can capture in some key locations is great for us.”
Greggs reported it continued to trade well over Q3, with total sales up 14.6% and like-for-like sales in company-managed shops rising by 9.7% when compared with the same period in 2021.
Some transport hub sites, such as Liverpool Street station, trade from 5 a.m. to 11 p.m., allowing the operator to take advantage of broader trading windows. Drive-thrus and transport hub sites will be a key focus, along with retail parks.
“The Canary Wharf site has traded so well we’re about to open a second site before the end of the year in that location.”
The value proposition will be key going into the coming months, with Greggs looking to maintain its competitive price point. It recently introduced its second price rise this year, but maintains that rises of 5p-10p remain behind inflation levels.
“I’m not in control of the market the business is operating in, which is why dialling up our value message is so important,” Currie said. “We are a value-led business. We want to keep the value price leadership.”
With an average transaction value of approximately £4, the company has yet to see significant changes in spend. It will refrain from significant price increases so that “customers can access those value products,” according to Currie.
“It’s about looking at value across the range…all key products offer great value.”
The signature sausage roll now costs £1.15, while a meal deal is £2.50. Customers have responded well to the increasingly customisable menu as well as newer items such as pizza and the pumpkin spice latte.
Currie further said the chain has little evidence that customers are trading down amid the cost of living crisis, but said that Greggs will keep focusing on its value messaging as well as drive volume through its app.
The company is attempted to mitigate costs through a combination of forward purchasing cover for Q4 energy requirements, with average costs expected to be below the level of the recently-announced price cap.
“We’re covered quite significantly for this year and have appropriate coverage for Q1 2023,” Currie said. “And we have no debt as a business…I’m more focused on how the government will help the majority of our customers.”
She welcomed the energy price cap for households as well as the reversal in national insurance contributions.
“We operate in the environment that we’ve given and make sure we offer our customers as much value as we possibly can.”
Furthermore, the company has amped up its retention efforts and is in a better place in terms of staffing than it was in 2021, between pay rises and the addition of a new recruitment system to support expansion.
While Currie emphasised the uncertainty surrounding the wider economic climate, she said cost inflation – c9% for this year – will continue into next year but did not predict any drop in consumer demand.
“It’s not really a discretionary spend – if you’re on the go, you need to eat.”
