// Greggs boss warns prices may rise as sales in big cities lag behind the rest of its estate and cost pressures increase
// The business traded strong in the first 19 weeks of 2022 with like-for-likes in company managed stores up 27.4% year-on-year
The boss of Greggs has warned prices could “move up 10%” as sales in larger cities lag the rest of its estate as cost pressures increase amid soaring inflation.
The Newcastle headquartered food retailer’s CEO Roger Whiteside said the food-to-go chain was in “uncharted territory” as supply constraints, Russia’s invasion of Ukraine and the sluggish post-pandemic recovery of consumer demand push up costs.
“We see ourselves as value leaders in the food-to-go market, and that market has been forced to put prices up, we are no different,” Whiteside said.
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“But we make sure that the gap between us and our competitors never narrows so that we are always the best value.”
He said that prices in its stores will depend on “price elasticity”, how much demand is affected by cost, adding “some prices might move up 10%, other prices won’t move up at all”.
Russia’s invasion of Ukraine has pushed up global wheat prices in recent months, with costs jumping further following news in recent days of India’s export ban, which was imposed after a heatwave hit the nation’s crops.
Ukraine is one of the world’s top producers of wheat, maize, barley and various cooking oils – the building blocks of many supermarket staples – and many farmers have abandoned their fields to fight the Russian invaders.
However, the business said it has a “good” start to 2022 after launching 49 new shops in the first 19 weeks of the year, with like-for-likes in company managed stores up 27.4% year-on-year.
The retailer said sales had begun to recover from the impacts of the pandemic, as it said its chicken goujons and potato wedges have proven particularly popular.
Total sales in the period came in at £495 million compared to £378 million a year earlier.
Recent openings include a number sites in retail parks and new travel-based units at Birmingham and Liverpool airports. This meant there was a total of 2,224 shops trading at 14 May.
Looking ahead, the business said trading levels are in line with plans and its expectations for its full year remain unchanged although it expects inflation will bite.
The company added: “We have made a good start to 2022, with sales in line with our plan and a strong pipeline of new shop acquisitions ahead. Looking ahead, market-wide cost pressures have been increasing and consumer incomes will clearly be under pressure in the second half of the year. We will continue to work to mitigate the impact of cost pressures whilst protecting Greggs’ reputation for exceptional value.”
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