The boss of Greggs has blamed wage, tax and food cost rises for a 5p hike in the price of its sausage rolls, after it faced a backlash over the decision.
The UK’s biggest bakery chain has increased the price of its flagship product to £1.30, as part of an average 4% price rise on key items including coffee and doughnuts.
The increases, introduced just after Christmas, were labelled “disgraceful” by shoppers with some saying they would stop buying the sausage rolls if prices rose further.
Roisin Currie, the chief executive of Greggs, said the price rises were driven by the chain passing on increases to its wage bill, with two-thirds of Greggs workers handed a 6.1% pay rise this month.
However, she said the increase – the latest in a string of small rises in the past few years – had also accounted for the extra employers’ national insurance contributions costs due in April, meaning the company was not planning further price rises this year.
“We had to look at it around inflation headwinds. We came out of Covid in peak inflation territory,” Currie said. She added: “We still offer great value” with, for example, the price of its breakfast meal deal held at £2.85.
Greggs reported slowing sales growth over the festive period, blaming weakening consumer confidence and fewer shoppers on high streets.
The company said its total sales rose by 11.3% to just over £2bn last year. Company-managed shops posted a 5.5% increase in sales at established outlets over the year. However, growth more than halved to 2.5% in the fourth quarter – the 13 weeks to 28 December – reflecting “more subdued” high street footfall.
The company’s share price fell by 9% on the update, which analysts at Jefferies described as an “uncharacteristically soft trading performance”.
Currie described a “more challenging market” in the second half of 2024 as bad weather and weaker consumer confidence kept visitors away from high streets and shopping malls.
However, she said the national insurance costs would add just 1 percentage point to inflation at Greggs and would not affect the company’s plans for expansion or employment.
“The fundamentals are good,” Currie said, adding that the rise in the legal minimum wage would help increase households’ spending power as well as adding to costs for retailers.
The increase in the price of the sausage roll, which was as little as £1 in 2022, had been met with anger by Greggs’ customers. Linda Johnson, a retired quality control inspector, said: “I wouldn’t pay that – I would tell them to stick it.” Johnson said the “whole point of Greggs is that it’s cheap and cheerful,” the Mirror reported.
Another shopper, Heather Hife, said: “It’s disgraceful that they have raised their prices … I will stop buying sausage rolls when they reach £1.50.”
Retailers have warned they could be forced to cut thousands of jobs and will have to raise their prices to cope with the increasing cost burden of changes announced in October’s budget.
High streets and other shopping destinations had a “drab December”, according to the British Retail Consortium.
“Against this challenging backdrop, Greggs maintained its market share of visits, including remaining customers’ number one destination for breakfast, and controlled operational costs well,” Currie said.
Greggs opened a record 226 shops over the year, closed 28 and relocated 53, and had 2,618 shops trading at the end of December. It is pushing ahead with a further 140 to 150 net openings this year.
It said its festive bake, the vegan festive bake and the new festive flatbread were popular, and that pizza had been selling strongly into the evening.
Greggs stuck to its profit forecast for 2024, but the outlook for this year is more gloomy. Currie said: “Looking into 2025, employment costs will result in further overall cost inflation, although wage increases should provide support to consumers.”
