Greggs cashes in as credit crunch hits lunchers

Want some personal finance advice from Smarta? Put down that £4 M&S sandwich, organic lunchbox or sushi bento and get yourself down to Greggs. The chilli steak bakes are buy one get one free, and a sandwich, cookie and drink meal deal rings in at a mere £2.99.

OK, scoffing pies, pasties and pastries might expand your waistline as quick as it slims your overheads, but a rise in sales at low-price bakery chain Greggs suggests the recession is biting into lunchers’ budgets.

More workers are resorting to bringing their own lunch or economising where once selecting the day’s delicacy was an integral part of morning planning. Sainsbury’s revealed last year that the onset of recession saw a surge in sandwich boxes and bags. Earlier this year Tesco revealed sales of sandwich fillers was up 32%, while supermarket bread sales have risen for the first time in 35 years.

Marks has begun winding down its Food stores and Itsu founder Julien Metcalfe this week announced plans to overhaul his London-based mid-priced takeaway sushi brand by selling budget Chinese and Thai dishes at £2 a go.

In contrast, Greggs posted a rise in third quarter sales and unveiled plans to open 600 more stores, creating 6,000 jobs. It also has a £300m plan to upgrade its supply chain. It intends to extend its 1,400 outlets by 40-50 stores next year, then 70 a year from 2011.

Total groups sales rose by 2.5% and attributed the growth primarily to a rise in baguette sales, which are up 3.8% for the year.

Ken McMeikan, CEO, sees this as the perfect time to expand: "I am pleased with our sales performance against the background of continued tough high street trading conditions. We are committed to helping our customers make their budgets stretch as far as possible.

"The fact that Greggs is a baker, with wholesome, tasty products that are made in our own bakeries and shops remains a key point of difference versus our competitors. This gives us a great opportunity to attract new customers who are less familiar with the brand, particularly as we move into areas where we are new or under-represented.

“Although high street trading conditions remain tough we are building for the long term and remain confident in our ability to build an even stronger, more profitable business. We look forward to making the unique Greggs proposition available to many more customers throughout the UK as we embark on our major programme of accelerated expansion."

The real test for the bakery, though, will be sustaining growth after the economy starts picking up. Greggs might have more of a battle on its hands when all those organic and sushi-loving consumers can afford to blow the mid-week budget again.

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