As anyone who binged on Christmas chocolate as a child with predictably messy results can testify: you can have too much of a good thing.
This appears not to have occurred to high street baker Greggs, which now sells more than 1m of its iconic sausage rolls a day.
The company opened 226 new outlets last year, a number that falls to 145 net after factoring in closures and the relocation of existing stores – but it’s still wildly impressive for our supposedly stagnant high streets.
A similar number of new stores is planned for this year. The chain has its roots in the north, so it has been targeting the south, as well as transport hubs: train stations, airports and the like.
But might its runaway popularity be a problem? The Greggs estate now amounts to more than 2,600 stores, some of which are within a very short walk of each other. This can create the sort of problems familiar to American owners of fast-food franchises, sold by the likes of McDonalds or Subway.
This bunching-up, sometimes referred to as the “Starbucks overreach”, can boost brand visibility and increase impulse buys. But when overdone, it risks cannibalising sales. In our bigger cities, you’re never far from a frappuccino served in a cup with the mermaid trade mark – but who needs a high-street branch every 100 metres? It doesn’t make business sense.
Just for fun, I checked out the number of Greggs outlets in the Norfolk and Suffolk market towns I yomped around as a cub reporter for the Eastern Daily Press using the company’s website.
King’s Lynn, a town with a population of a shade under 50,000 people, has three Greggs, the closest pair of which are separated by a mere 240 metres. Over the border in Suffolk, Lowestoft (population 71,000) boasts the same number. So, funnily enough, does Thetford, with a population of just over 25,000. Lowestoft must be feeling short-changed on a per head of population basis.
All that extra space helped Greggs break the £2bn revenue barrier last year. But the company has slowed down markedly in terms of sales growth, falling from 52 per cent in 2021 to 11 per cent last year. And even that comes with a caveat. Same-store sales, which strips out the impact of new openings and closures with the aim of assessing the performance of the underlying business, increased by just 5.5 per cent. However, the company admitted its sales growth declined to an almost pedestrian 2.5 per cent in the fourth quarter of 2024 in company managed stores, and to just 1.7 per cent in the first nine weeks of 2025. Could the board spell “saturation” for me?
Scepticism about where Greggs goes from here is reflected in the shares, which have found themselves on an end-of-day discount. Over the last 12 months, the company, which holds a place in the second tier FTSE 250 index, has shed roughly £1.2bn of value on the London Stock Exchange. An investment of £100 a year ago would today be worth £57. If you had invested that same £100 in the FTSE 100, it would be worth nearly £110, both excluding dividends.
I’m not knocking the brand, which remains much-loved. The first thing I had after a road accident led to me suffering through more than three months of hospital food was a Gregg’s sausage roll. Perhaps not unconnected, I am also currently researching a new book, a history of the sausage.
But Greggs is about far more than its iconic pastry-wrapped product. It has proved itself to be a nimble business, capable of updating its concept on the fly. It was once a pure bakery, selling freshly baked bread and the like. It looks very different today, with that focus on takeout and a healthier product line-up to suit modern tastes, not to mention the political climate. The vegan version of those sausage rolls have proven a huge hit.
All very well, but if the group hasn’t reached saturation point, it can’t be far from it. Which begs the question: after, I don’t know, opening a fourth branch in Lowestoft, isn’t it time to look at the export market? You can understand why the board might feel a little twitchy about that. A brief foray into Belgium was less than successful, with the group ultimately pulling the plug on the loss-making venture.
British retailers have a long and unhappy history of trying – and failing – overseas. Even Tesco, which has the largest market share among UK supermarkets, taking one in every four pound from grocery shoppers, has retreated from international markets to focus on the UK and Ireland.
But more recently, there have been some notable exceptions. The “undisputed king of trainers”, JD, is now in 50 countries, using a mix of directly owned stores, franchises and joint ventures, including nearly 300 US branches. Primark and Sports Direct have also taken their concepts abroad.
True, Greggs is a particularly British brand, catering to British tastes, much more so than those other three selling pricey trainers, cheap clothes and discount sports gear. But perhaps the bigger issue for it is whether its backers are willing to let it try.
UK investors have proved reluctant to fund the sort of overseas expansion their American counterparts have happily poured money into. They’ve much preferred safe, steady but decidedly dull dividend payers.
This reluctance holds back the UK market, and has young companies with their eyes on growth running for Wall Street, where shareholders are much more willing to roll the dice, and have been rewarded for doing so.
If Greggs is guilty of myopia – and it’s easy to make the case with three branches in Thetford – it’s hardly alone.
