Thousands of Greggs workers will share a £17.6m bonus pot this month after the bakery chain famous for its sausage rolls and steak bakes said it had made a record annual profit and overtaken McDonald’s to become the UK’s most popular breakfast spot.
Britain’s biggest bakery chain said 25,000 employees – out of a total of 32,000 across the UK – would receive a bonus in their pay packets at the end of March, as it reported a 27% jump in profits to £188m.
Under a profit share agreement, Greggs shares 10% of profits each year with staff who have worked at the chain for at least six months. The payment to each employee varies: for example, someone working 22 hours a week with six years’ service will receive £765.
Greggs said there was better news for its customers, too, with no further price rises planned this year. It increased prices by between 5p and 10p on some items in December but held down the cost of bestselling items including its sausage rolls and vegan sausage rolls.
Roisin Currie, the Greggs chief executive, said: “We have no plans for further price rises. We’re still talking about the cost of living crisis. We know that the consumer disposable income remains under pressure.
“It’ll be another tough year. Last year and the year before were tough for the consumer, and that may continue through this year. What’s helpful is that we are seeing a lower level of inflation in the economy.”
Greggs expects cost inflation of between 4% and 5% this year, led by wage rises, although this partly depends on geopolitical risks but Murphy said the company expected that to be offset by the December price rise and efficiency savings.
Cost inflation averaged 8.5% last year but ended 2023 closer to 5%, as pay was fixed from January, food and packaging price rises slowed during the second half and energy costs were less volatile.
Currie said Greggs had overtaken McDonald’s to become the UK’s No 1 takeaway breakfast seller for the first time, with 19.6% of visits, after adding items such as bacon rolls to its menu and gradually shifting opening hours to between 5am and 6.30am from 8am or later 10 years ago.
“We have been evolving into that market,” she said, adding that Greggs was not expecting to overtake McDonald’s for later meals, as its share of takeaway dinners is still less than 2%, for example.
The company said its full day market share was a record high, with its share of food-to-go visits 8.2%, up from 7.7% in 2022.
The company raised its dividend payout to shareholders, after posting 8.2% growth in like-for-like sales – at stores open at least a year – in the first nine weeks of 2024. Pre-tax profit rose 27% to £188m in 2023. Sales in company-managed shops climbed 13.7% year on year.
The chain introduced a new range of flatbread sandwiches and new savoury bakes, including the spicy vegetable curry bake. It said evening meals such as chicken goujons, potato wedges and pizzas were selling well, and it brought back the vegan steak bake after customers asked for it.
The rise in the national minimum wage to £11.44 an hour for adults aged 21 and over from 1 April should help to “put some more money into the pockets of the consumer”, Currie said.
The evening is the fastest-growing part of the day, and Greggs is looking to hire more staff to serve customers on their way home from work. Delivery sales grew 23.6% last year after partnerships with Just Eat and Uber Eats.
Greggs runs 2,473 shops after 145 net openings last year, including at Canary Wharf and Waterloo stations in London and at Gatwick airport. It intends to open up to 160 net new shops this year, as it is aiming for more than 3,000 UK stores over the longer term. Some of those will be via partnerships with retailers including Primark, Tesco and Sainsbury’s.
Greggs shares were up 5% on Tuesday morning, making it one of the biggest risers on the FTSE 250.
