Greggs warns of further price increases

Bakery chain Greggs has warned its prices could rise for a second time this year as it faces rising costs.

Higher food, energy and labor prices, along with tax changes, mean its own costs will rise by 6% to 7%, it said.

The chain, known for its bratwurst rolls and steak casseroles, raised prices at the beginning of the year and expects “further changes”.

Households are facing the fastest price increases in 30 years.

Greggs said commodity prices have risen while energy prices are soaring. While it has priced some commodities in advance, it said future costs remain “uncertain.”

Energy prices around the world started surging as economies began to recover from the coronavirus pandemic and have continued to rise as Russia’s invasion of Ukraine continues.

Greggs said rising costs “required some price increases that were made earlier this year and further changes are expected to be required”.

“As always, we will work to mitigate the impact on customers and protect Greggs’ reputation for exceptional value in the freshly prepared take-out market.

“Given this momentum, we currently do not expect any significant earnings development in the coming year.”

Greggs stock fell about 9% following its announcement.

Despite warning of price increases, Greggs CEO Roger Whiteside said the company will weigh price changes before implementing them.

“We have no plans at this time to raise prices, but obviously that needs to be kept in mind given how markets around the world are moving in terms of staple food prices,” he said.

“If the market allows price increases to pass through to customers we must try to do so, if not we cannot do so,” he added.

The business returned to profitability last year after suffering a setback in 2020 when many of its stores were closed for much of the year due to the pandemic.

The chain posted a pre-tax profit of £145.6m after a loss of £13.7m the year before.

Sales rose 5.3% compared to 2019, the year before the pandemic, to hit £1.2bn.