Sausage roll slowdown sees Greggs hit by austerity’s effect on consumers

By MARTIN FLANAGAN
Published on 11/10/2012 23:40

AUSTERITY Britain was laid bare yesterday when the country’s biggest seller of fast food revealed that underlying sales had been hit and would remain negative for the rest of the year.

Greggs, which specialises in pies, pizzas, sandwiches and sausage rolls, said pressure on flooding, household budgets and poor weather meant that sales at stores open for more than a year fell 2.6 per cent in the 14 weeks to 6 October.

That was a worse-than-expected partial recovery from the 3.5 per cent sales slide in the previous quarter, which included the exceptionally wet spring.

Greggs, which has 230 of its 1,600 shops in Scotland, warned that it expected consumers to continue “showing restraint” in its final trading quarter.

Ken McMeikan, group chief executive, said the underlying sales downturn “reflects the continuing challenges UK consumers are facing”.

He added: “We remain cautious about the economy and we anticipate that like-for-like sales will remain negative in the final quarter”.

The group said it aimed to offset the impact of lower like-for-like sales through cost control and an increased profit contribution from its wholesaling and franchising activities.

McMeikan also said Greggs planned to open another factory in southern England in addition to its main Newcastle plant “to help [distribution] logistics”.

Total sales in the latest period rose just under 6 per cent, reflecting 37 net new store openings, and the success of wholesaling frozen products such as sausage rolls through the Iceland supermarket chain.