Greggs has seen gross sales leap by 27.1% within the first half of the yr as clients flip to cheaper meals throughout the price of residing disaster.
Sales within the 26 weeks to 2 July had been £694.5m in comparison with £546.2m a yr earlier, however income remained flat – £55.8m in comparison with £55.5m final yr, because of the reintroduction of enterprise charges, elevated VAT and inflation.
Chief government Roisin Currie instructed PA information company: “We know the economic environment is challenging and it is tough out there for our customers, so we are doing everything we can to protect our price proposition.
“We aren’t proof against value inflation however we try onerous to mitigate towards it impacting clients.”
In May the corporate stated clients would see will increase of 5p or 10p on some gadgets however costs are fastened with suppliers for across the subsequent 5 months, which ought to carry some stability.
Changes deliberate for a few of Greggs’ greater than 2,200 UK retailers embody prolonged opening hours, menu updates, and expanded supply protection.
More than 1,000 branches at the moment ship by app Just Eat, and the typical buyer spends roughly thrice as a lot on deliveries as they might within the store.
Some 500 retailers will open till 8pm by the tip of the yr and new merchandise will embody jacket potatoes, scorching yum yums with salted caramel sauce, and brownies with chocolate dipping sauce.
Greggs ‘considerably uncovered’ to value of uncooked supplies, power, and wages
But rising inflation and different prices might imply difficult occasions forward, based on Charlie Huggins, head of equities at Wealth Club.
He stated: “The cost of raw materials, energy and wages are all rising rapidly. Greggs is significantly exposed to all three, putting pressure on profits.
“There’s a restrict to how far it could possibly increase costs to offset these further prices.
“If Greggs can maintain its recent sales momentum, it will go some way to offsetting inflationary pressures.
“But the group’s near-term prospects nonetheless look slightly unappetising given the extraordinarily unsavoury value outlook.”
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Domino’s reports fall in pre-tax profit
Another food chain feeling the effects of the cost of living crisis is pizza business Domino’s, which saw a 16% fall in pre-tax profit in the first half of the year.
The business said it faces three big challenges – food supply chain uncertainties arising from the Ukraine conflict, general food commodity price inflation, and the effect of cost of living concerns on consumer behaviour.
It added: “These will proceed to be a magnet for the enterprise over the following six months and are being addressed and mitigated in a number of methods.
“With the exception of cheese, we have agreed prices in advance with suppliers of all our key ingredients, covering the remainder of 2022.
“We have additionally tactically agreed superior pricing into 2023 for sure substances which we anticipate to stay unstable within the brief time period.
“As a result of these measures, and our resilient long-standing relationships with our main suppliers, we have suffered no material shortage of key ingredients and continue to supply franchisee stores to our world-class standards of availability.”
Chief government officer Dominic Paul stated: “We will be increasing our media spend in the second half compared to the first half, amplifying our value message to customers as we head into key events such as the men’s football World Cup.”
Source: information.sky.com”