Greggs has revealed that its sales in large cities and locations near offices are lagging behind those elsewhere in the UK as a result of the shift to home working.
Roger Whiteside, the outgoing chief executive of the bakery chain, said transaction numbers in city centres were 10% below pre-Covid levels. “There are less people going to offices and less people going shopping. I suspect it will never go back to the numbers pre-Covid, although it might get a bit better,” he said.
The findings were backed by independent data from analysts at Springboard published on Monday, which showed the number of shoppers in central London last week 22% down on 2019 levels, 16.2% lower in regional cities excluding the capital, and 17% down in office locations. That compares with 11.4% lower numbers in London suburbs and 12.5% in historic towns.
However, Whiteside said Greggs was opening more outlets in city centres, including one in Leicester Square in central London, as it took advantage of lower rents while others had pulled out. He said sites in the capital were “still busier than anywhere else” despite being less popular than before the pandemic.
Greggs said sales in transport hubs, such as railway and bus stations, had shown a “marked increase” as day trips, holidays and office workers return.
Whiteside said there were no signs that customers had reduced spending as a result of the cost of living squeeze, and the chain reported a 27.4% rise in sales at established outlets in the 19 weeks to 14 May.
The company said there had been strong demand for its new hot food, such as chicken goujons and potato wedges, as sales rebounded after the loosening of Covid-19 restrictions.
Presenting his last set of results before stepping down, Whiteside said the success of hot food was an important part of Greggs’ business strategy. “This is a market opportunity. People want value for money [food] in the evening,” he said.
The company warned that it would increase prices for the third time this year – by up to 10% on some products – with most price rises between 5p and 10p, similar to increases in January. The company also put up prices on some items in April when the government removed VAT relief.
Whiteside said Greggs would watch competitors closely to try to remain competitive, adding: “It is inescapable in the current climate that prices will have to move.”
The company said: “Consumer incomes will clearly be under pressure in the second half of the year. We will continue to work to mitigate the impact of cost pressures while protecting Greggs’ reputation for exceptional value.”
Greggs said in March that prices were likely to increase because of the rising cost of ingredients, energy and fuel after Russia’s invasion of Ukraine.
The baker, best known for its sausage rolls and pasties, predicted that profits would fail to increase in the year ahead as it tried to offset cost inflation of up to 7%, up from 5% at the start of 2022.
The company faces a potential shareholder revolt over executive pay at its annual meeting on Tuesday after criticism from two respected investor advisory groups.
Bonus payouts for Whiteside amounted to more than double his basic salary of £575,209, taking his total package to £1.9m including benefits.
The investment adviser Pirc said shareholders should vote against the remuneration report, arguing that Whiteside’s pay was excessive and amounted to 79 times that of a regular employee.
