Greggs sees a 27.1% increase in sales as shoppers search for cheaper meals | Business newsletter

Greggs saw a 27.1% increase in sales in the first half of the year as customers turned to cheaper meals during the cost of living crisis.

Sales in the 26 weeks to 2 July were £694.5m compared with £546.2m the year before, but profits remained flat – £55.8m compared with £55.5m last year, due to the re-application of business rates, increased VAT and inflation.

CEO Roisin Currie told the PA news agency: “We know the challenging and difficult economic environment is out there for our customers, so we are doing everything we can to protect the price proposition. mine.

“We’re not immune to cost inflation but we’re doing our best to minimize its impact on customers.”

In May, the company said customers will see 5p or 10p increases on some items but prices are fixed with suppliers for about the next five months, which should provide some stability.

Changes planned for some of Greggs’ more than 2,200 UK stores include expanding opening hours, updating menus and expanding delivery ranges.

More than 1,000 branches are currently delivering through the Just Eat app, and the average customer spends about three times more on delivery than when going to a store.

About 500 stores will be open until 8 p.m. later in the year, and new products will include jacket potatoes, hot yogurt with salted caramel sauce, and macaroons with chocolate sauce.

Greggs ‘significant exposure’ to raw material, energy and wage costs

But rising inflation and other costs could mean challenging times ahead, according to Charlie Huggins, head of equities at Wealth Club.

“The cost of raw materials, energy and wages are all increasing rapidly. Greggs is significantly impacted by all three, putting pressure on profits,” he said.

“There’s a limit to how much it can raise prices to offset these additional costs.

“If Greggs can sustain recent sales momentum, it will somehow offset inflationary pressures.

“However, the group’s short-term outlook remains bleak with an extremely tough cost outlook.”

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Domino’s reports drop in pre-tax profits

Another grocer feeling the effects of the cost-of-living crisis is pizza business Domino’s, whose pre-tax profit fell 16% in the first half of the year.

Businesses say they face three major challenges – food supply chain uncertainties arising from the Ukraine conflict, general food commodity price inflation and the impact of concerns over bio-prices. action on consumer behavior.

It added: “These will continue to be the focus of the business over the next six months and are being addressed and mitigated in many ways.

“With the exception of cheese, we have pre-agreed prices with suppliers of all of our key ingredients, including the remainder of 2022.

“We have also tactically agreed to an enhanced valuation in 2023 for certain components that we don’t expect to be volatile in the short term.

“As a result of these measures and our enduring long-term relationships with key suppliers, we have not run short of key ingredients and continue to supply third party stores. license to our world-class availability standards.”

“We will increase media spending in the second half compared to the first half, to amplify our value messages to customers as we head towards key events,” said CEO Dominic Paul. like the men’s soccer World Cup.”