Greggs sales boosted by 'healthy choice' sandwich range

The fast food and bakery firm saw sales rise 5% in the first quarter of 2015 as it revealed a £20m special dividend for shareholders

Greggs on Neville Street, Newcastle City Centre
Greggs on Neville Street, Newcastle City Centre

Sales at fast food and bakery chain Greggs rose 5% in the first quarter, thanks in part to a move into healthy food.

Around £1m worth of the under 400 calories Balanced Choice sandwiches are being sold each week and chief executive Roger Whiteside said it will not be long before sandwiches overtake pasties and sausage rolls as the firm’s top sellers.

The Newcastle-headquartered chain announced a special £20m dividend of 20p per share as result of its strong cash position with surplus to investment requirements.

This dividend will be paid on July 17 to shareholders on the register on June 19.

Total sales for the 16 weeks to April 25, 2015 grew by 5% and like-for-like sales in Greggs’ shops grew by 5.9% over the same period, ahead of expectations.

Breakfast items, including a new £2 meal deal, also continued to be an important growth driver the firm said, as did coffee — which also sells around £1m of units a week.

Mr Whiteside said: “It’s been a good start to the year and the market conditions look to be remaining favourable. The second half of the year will be tougher given last year’s comparables but we are confident of a further year of growth.”

He added: “Our better than expected trading has been driven by changes to products, including our salads, fruit pots and new range of own-label drinks.

“We launched an extended breakfast menu a couple of months ago which is working very well. Coffee is still growing for us too.”

On the back of the trading update Greggs said it would maintain investment in the business.

During the period 69 shops were refurbished and 200 to 220 shops are expected to undergo work this year. 24 new shops opened, including 17 franchised units in transport locations, and 18 were closed, giving a total of 1,656 shops trading at April 25.

A “test site” with the Irish motorway service operator Applegreen, at a service area located on the M2 near Belfast, was also announced as Greggs’ first outlet in Northern Ireland.

The store opens this week and Mr Whiteside said the firm’s research on the territory pointed towards a good market opportunity in the region.

Mr Whiteside said that while there were no short-term plans to open Greggs stores outside of the UK, overseas expansion could feature in the long term.

In a note to shareholders Greggs said: “The strong start to 2015 has been supported by rising consumer disposable incomes and low input cost inflation. We expect market conditions to remain favourable and support a good first half performance, ahead of our previous expectations.

“In the second half of the year we will come up against stronger sales comparables and a less certain cost outlook.

“However we expect to deliver good growth for the year as a whole and further progress against our strategic plan.”

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