​Baking Success: Greggs Claims 2% of Hospitality Market

Greggs now garners £2 from every £100 spent in the UK's hospitality sector. This revelation comes from the company's latest trading update, highlighting a substantial 27% increase in annual profits. Earlier this month, Greggs reported a commendable pre-tax profit of £188.3 million for 2023, which significantly rose from £148.3 million in the preceding year. This increase was propelled by a 13.7% surge in like-for-like sales across company-managed shops.

Greggs has firmly established itself as the dominant force in the UK's food-to-go breakfast market, capturing about 20% of the segment. This achievement underscores the chain's pivotal role in the hospitality sector, reflecting its extensive appeal and growing customer base.

The company's financial success translated into tangible rewards for its workforce, with approximately 25,000 employees sharing a bonus pool of £17.6 million. This gesture affects Greggs profitability and its commitment to rewarding its staff.

Industry experts, including Chloe Blais from Morningstar DBRS, have weighed in on the results. Blais predicts a sustained interest in budget-friendly quick service restaurants (QSRs) among price-conscious consumers. She anticipates that these establishments will continue to generate significant revenue, thanks in part to their less labour-intensive operations, which are likely to mitigate the impact of a 10% increase in the National Living Wage. However, Blais also cautioned that mid-range and particularly independent restaurants might face considerable challenges, including potential closures, if they fail to manage costs effectively or secure alternative financing.

Rerrj at English Wikipedia, CC BY-SA 4.0, via Wikimedia Commons

Amid challenging high street trading conditions, Greggs' CEO, Roisin Currie, remains cautiously optimistic. Currie emphasised the importance of value to Greggs' customers, especially in a climate where disposable income is under pressure. She reaffirmed the company's dedication to maintaining its leadership and offering unparalleled value despite the challenging market environment.

We welcome your thoughts and comments below on Greggs' strategic positioning and its implications for the UK hospitality sector.