Greg’s sees a 27.1% increase in sales in the first half of the year as customers turn to cheap food during a cost of living crisis.
Sales from 26 weeks to 2 July were £694.5m compared to £546.2m the year before, but profits remained flat – £55.8m compared to £55.5m last year, due to the re-introduction of trading rates, an increase in VAT and inflation because of.
Chief Executive Roisin Curry told the PA news agency: “We know the economic environment is challenging and it’s tough for our customers, so we’re doing everything we can to protect our value proposition.
“We are not free from the cost of inflation, but we are working hard to mitigate against it affecting customers.”
In May the company said customers would see a 5p or 10p increase on some items, but that prices have been settled with suppliers for the next five months, which should bring some stability.
Some of Greg’s planned changes for more than 2,200 UK stores include extended opening hours, menu updates and expanded delivery coverage.
Currently more than 1,000 branches deliver through the Just Eat app, and the average customer spends almost three times as much on delivery as they do in-store.
Some 500 shops will open until 8 p.m. by the end of the year, and new products will include jacket potatoes, hot Yum Yum with salted caramel sauce, and brownies with chocolate dipping sauce.
Gregs ‘quite exposed’ to raw material, energy and wage costs
But rising inflation and other costs can mean challenging times, according to Charlie Huggins, head of equities at Wealth Club.
He added: “The cost of raw materials, energy and wages is rising rapidly. Greggs is exposed significantly to all three, putting pressure on profits.
“There is a limit to how far it can raise prices to offset these additional costs.
“If Greg can maintain his recent selling momentum, it will go some way to staving off inflationary pressures.
“But the group’s near-term prospects still look untapped given the very unsavory cost outlook.”
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Domino’s reports fall in pre-tax profit
Another food chain that is feeling the effects of the cost of living crisis is pizza business Domino’s, which saw a 16% drop in profit before tax in the first half of the year.
The business said it faces three major challenges — food supply chain uncertainty resulting from the Ukraine conflict, general food commodity price inflation, and the impact of cost of living on consumer behavior.
It added: “These will continue to be a focus for the business over the next six months and are being addressed and mitigated in a number of ways.
“With the exception of cheese, we have agreed prices in advance with all of our key ingredients suppliers, covering the remainder of 2022.
“We have also agreed to advanced pricing in 2023 for some ingredients, which we expect to be volatile in the short term.
“As a result of these measures, and as a result of our flexible long-term relationships with our core suppliers, we have experienced no material shortage of key ingredients and continue to supply franchise stores to our world-class standards of availability.”
Chief Executive Officer Dominic Paul said: “We will increase our media spend in the second half compared to the first half, enhancing our value message to customers as we prepare for major events such as the men’s soccer World Cup.”