Greggs has seen a boost in turnover thanks to the popularity of its new chicken sausage roll, but the bakery chain has warned that food inflation could rise if the conflict in the Middle East persists. The FTSE 250 company reported a 3.3% year-on-year sales increase in recent weeks, supported by the opening of 20 new shops this year.
Aggressive Store Expansion Continues
Greggs has doubled down on its store expansion strategy, planning to open 120 new sites in 2026. Despite this, its share price has fallen amid investor concerns that the market has reached "peak Greggs." The company says the chicken roll, launched in April, has quickly become a "customer favourite" and a "standout" performer, completing a "trilogy" alongside its classic sausage roll and vegan roll.
Menu Innovation Drives Growth
Greggs has embarked on an ambitious menu expansion, introducing a matcha drink and tandoori chicken pizza, both well-received by customers. Chief executive Roisin Currie insists growth lies in "rapidly evolving our menu," despite the company becoming the most-shorted stock on the FTSE earlier this year.
Inflation Risks Loom
Greggs warned that cost inflation could balloon by the end of 2026 if the Middle East conflict continues. "We are monitoring the situation in the Middle East and should the conflict continue and become prolonged, we, like all food retailers, will likely see higher overall cost inflation through the end of 2026 and into 2027," the firm said. Industry figures have warned that food inflation could hit double-digit rates in the coming months. The Bank of England has forecast six to seven percent food inflation this year, while supermarkets like Sainsbury's and Tesco are working to keep prices down.
Greggs is protected by fixed terms for 85% of its energy requirements this year and 50% for next year, and has maintained its profit guidance. The Newcastle-based baker, founded in 1939, currently operates 2,759 stores across the UK.
