In its 83-year history Greggs (LON: GRG) has made very few missteps. There was the time it tried to start serving sourdough pasties as a ‘healthy choice’ and the incident when a questionable parody of the company’s logo ended up on Google images. But that’s pretty much it. Customers and shareholders have benefited equally from Greggs' unwavering quality.

But will those customers keep buying sandwiches and pasties during a recession at a rate which keeps sales rising ahead of inflation-elevated costs? That’s a question which is clearly playing on shareholders' minds.

After a 33% fall in the year to date, Greggs’ shares are trading on 18 times forecast earnings. Could this be a rare entry point for investors who have not been able to stomach this quality operator’s previously exorbitant price tag?

Key Figures

  • Annual sales (year to December 2021): £1.2bn (5% 5yr CAGR)
  • Annual revenue per store: £559,000 (from £518,000 in 2018)
  • Annual operating profit: £153m (8% 5yr average operating margin)
  • Return on capital employed: 23% (19% 5yr average)
  • Operating cash conversion: 180% (140% 5yr average)

Profile: From delivery to bakery and back again

In 1909 John Gregg bought a pushbike so he could begin delivering eggs and yeast from his family’s bakery business to working class homes around Newcastle. While he was fighting in World War II, his wife upgraded to a van and used it to deliver confectionery as well as ingredients for bread. By 1939 the Greggs had founded their own bakery business and in 1951 it opened its first store on Gosford High Street.

The Greggs bakery chain expanded quickly throughout the late 20th Century, selling its own baked goods via its store estate in the North of England. In 1985 the company listed on the Main Market of the London Stock Exchange, a constituent of the Consumer Cyclicals industry group.

Earnings rose every year between 1991 and 2006, providing investors with a steadily rising share price and a healthy dividend on top. But the financial crisis and rising competition from the emerging bakery counters in supermarkets put paid to the reliable returns.


In 2013, Roger Whiteside was brought in to steady the ship. By now more than 80% of Greggs’ sales were coming from food to be consumed on the go. And so the company shifted gears. Rather than bakeries, it would strive to become the UK’s leading food-on-the-go retailer.

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