Greggs H2 2024 Earnings Report

Greggs EPS Results

• Actual EPS: GBX 150.70
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Greggs Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Greggs Announcement Details

• Quarter: H2 2024
• Date: 3/4/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 4, 2025
• Conference Call Time: 2:00AM ET

Greggs (LON:GRG) is a leading UK food-on-the-go retailer with more than 2,600 shops nationwide and approximately 33,000 employees across the business. As a food-on-the-go retailer, Greggs specialises in daily fresh shop-made sandwiches, and savouries baked fresh in the shop ovens throughout the day. These are further complemented by popular products and ranges including freshly ground coffee, breakfast, confectionery and evening menu items. Greggs also offers a healthier options range which includes a selection of gluten-free, vegan-friendly and lower calorie products. Greggs has delivery partnerships with Just Eat and Uber Eats enabling customers to enjoy their Greggs favourites via order and delivery. Greggs’ Click + Collect offering provides customers with the ability to select their shop and collection time slot of choice and allows them to order a range of Greggs products in advance, ready for collection when they arrive our shops. Greggs’ loyalty scheme ‘Greggs Rewards’ is a mobile payment app designed to reward customers for their loyalty, and now allows customers to earn rewards right across the range, not just coffee, whilst making shopping across its shops more convenient, quicker and easier. In April 2024, Greggs launched its latest sustainability report 'The Greggs Pledge' which set out progress made against its ten commitments to help make the world a better place.

Greggs H2 2024 Earnings Call Transcript

Key Takeaways

• Delivered record 2024 results with sales surpassing £2 billion (11% growth, 5.5% like-for-like) and underlying pretax profits of £189.8 million (13.2% growth), supporting a 69 pence total dividend and a £20.5 million colleague profit share.
• Expanded its estate by opening 226 new shops and achieving net growth of 145 in 2024, with a pipeline targeting 140–150 net new openings in 2025 and capacity for over 3,500 sites nationwide.
• Drove the fastest-growing daypart, with evening sales now at 9% of shop turnover, while delivery channels (6.7% of sales) and the Greggs app (20% of transactions) continued strong growth.
• Entered a peak investment phase with around £300 million CapEx in 2025 to build Derby and Kettering supply-chain hubs alongside new shop roll-outs, aiming to sustain a medium-term return on capital employed of 20%.
• Maintained its position as the #1 food-to-go brand overall and for value, with improved brand health metrics and ongoing menu innovation including iced drinks, MADE-TO-ORDER wraps and the new mac & cheese.

Presentation

[Roisin Currie, CEO & Executive Director at Greggs]

Good morning and thank you for taking the time to join Richard and myself for the Greg's twenty twenty four prelim results presentation. So the agenda today will be in the usual format. I will give you an update in the results we've announced today. I will share with you some of the key highlights, and then Richard will take you through the financial performance before handing back to me for the operational and strategic review. So it is great to be able to stand here and announce another record performance in 2024 despite a very tough and challenging marketplace, driven by strong execution of our strategic plan.

[Roisin Currie, CEO & Executive Director at Greggs]

The slide behind me covers all of the key information, but just a few points to note. For the first time, we have delivered sales of over £2,000,000,000. That was over 11% total sales growth, and that was 5.5% on a like for like basis. We also had strong profit delivery of 189,800,000.0 for underlying pretax profits, which was growth of 13.2% and also came at an improved margin. Amber Place announced a final dividend of 50p for 2024, bringing the total ordinary dividend per share to 69p.

[Roisin Currie, CEO & Executive Director at Greggs]

Also, really important to mention that in line with our profit share scheme, we will be sharing £20,500,000 with all of our colleagues who have six months service or more, and that will be in their pay packets at the March. But let me quickly just touch on some of the strong strategic progress that we've made. Just a quick overview, and I will go through these in more detail later. So firstly, the Greggs brand is in great shape. We continue to be rated as the number one food to go brand overall.

[Roisin Currie, CEO & Executive Director at Greggs]

And very importantly, we continue to hold the number one position for value. From an estate perspective, I can once again stand here and say we had another record year of shop openings with two twenty six new shops opened in 2024. So that continues to be the drumbeat of four shops opened every single week of the year. That gave us net growth of 145 for the year. And very importantly, the new shop pipeline continues to be healthy and delivering very strong returns.

[Roisin Currie, CEO & Executive Director at Greggs]

Really pleasing to say we continue to make progress with our evening strategy. And I'm pleased to report this daypart now represents 9% of company managed shop sales and continues to be the fastest growing day part. And delivery, working with our two aggregators, which we've previously told you, Uber Eats and Just Eats, has continued to grow. It now sits at 6.7% of company managed shop sales. The reward screen scheme, which we've always talked about every time we set a target, we smash it, continues to deliver for us.

[Roisin Currie, CEO & Executive Director at Greggs]

And that's really important because that delivers frequency of purchase with our customers, and now one in five shop scans come through the app. And then on this chart, we just show you, on the left, trying to illustrate the continued progress we're making on evening, on delivery, and on the Greggs app. So the axis on the left just shows you the progress we're making with delivery and evening sales, both of which are becoming a bigger part of our overall sales mix. The blue bar represents our evening growth, and you'll see that we accelerated that from 2022 into 2023 when we were opening more shops in the evening. But really importantly, 2024 is now representing the organic growth in that daypart, And that's very similar to the pattern that we saw in The Breakfast Channel, and I will update you later on our plans to unlock more menu options that we believe will appeal to that evening consumer.

[Roisin Currie, CEO & Executive Director at Greggs]

The yellow bar shows the step up we've made from '23 into '24 on delivery as we rolled out fully with Uber Eats, and we now have over 1,500 shops within the chain that offer delivery across the business. And then the red dotted line and the access on the right hand side demonstrate the continued growth and the progress of transactions that are being scanned to enable customers to unlock the Greg's reward loyalty benefits. And as I said earlier, that's very encouraging as we know that that delivers frequency of purchase as well as giving us much better customer data. Now while the 2024 trading backdrop was challenging with the food to go market static in volume terms and data points all across the industry indicating low consumer confidence in the economy overall, really importantly, our brand health metrics remain strong and are improving across a range of measures. So this slide just shows you how much progress the Greggs brand has made, taking a slightly longer view of the changes over the last three years.

[Roisin Currie, CEO & Executive Director at Greggs]

You can see this on the chart on the left with the blue bars representing our position in 2021 and the yellow bars representing 2024. And on the right of the slide, you can see how we track the impact of our brand activity. Pleasingly, in 2024, we became the number one food to go brand for consideration. And actually, from consideration to purchase intent, it is now converting at its highest ever rate at Greggs. And these are extremely important brand metrics for us to stay focused on, especially when the trading backdrop remains challenging.

[Roisin Currie, CEO & Executive Director at Greggs]

So in summary, we have delivered another strong set of results in 2024 with record sales and record profit. Very importantly, we have made continued progress on our strategic growth drivers, and our brand health remains and continues to strengthen. So let me now pass over to Richard to take you through the financial performance.

[Richard Hutton, CFO & Executive Director at Greggs]

Great. Thank you, Racheen, and good morning, everybody. As Racheen says, I'll take you through some of the financial performance and also some of the plans looking forward as we go into what's an important investment phase for the business. Slide eight, we've outlined the key numbers from the income and expenditure overview. As Roshin says, we went through billion of sales, so an 11% increase year on year.

[Richard Hutton, CFO & Executive Director at Greggs]

And you'll see that operating profit and PBT are both up over 13%. So some margin improvement on the year as well. We've broken out this time the net finance charge because I think it's important to just understand the two different sort of components of that. So we've enjoyed a lot of investment income over the last couple of years on the significant amount of cash that we've carried in the business, which we're now investing into the new sites that will unlock the medium term growth opportunity. So obviously, that's something that's going to come down in the years ahead, but you can see that in the last year, we received interest income of million, so quite significant.

[Richard Hutton, CFO & Executive Director at Greggs]

And then on the expense side, you can see the interest charge, which is the imputed charge that comes with the leasehold estate fundamentally. So as we open more shops and as we renew the leases importantly for older shops as well, we move on to the current interest rate regime. So it's a bit like sort of coming off your old fixed rate on your mortgage. There's a kind of a renewal effect in there as well. So it is something that will continue to grow and we should see the finance income come off as well obviously as we redeploy the cash.

[Richard Hutton, CFO & Executive Director at Greggs]

So an important one as we go into the next phase. I think you all know about the exceptional gains. So in 2023, we had a business interruption claim following the pandemic in 2020. And then in 2024, we disposed of a legacy freehold site down in Twickenham in South London, which realized million worth of gain. So that's the overall picture.

[Richard Hutton, CFO & Executive Director at Greggs]

I think the only other thing just to pull out is in terms of the earnings growth. You'll see when we come to the tax rate, slightly higher tax rate year on year, but that's just the annualization of the increase in the base rate, which went through in April 2023. So moving on to sales. This is the way we segment sales in the business on Slide nine. So we have the company managed shop estate and then we've got what we call business to business, which is a combination of the wholesale business that we have in the grocery trade with Iceland Foods and the franchise relationships that we have, primarily running Greg's stores in places like petrol forecourts and motorway services.

[Richard Hutton, CFO & Executive Director at Greggs]

And that's the bigger side of the business these days is the franchise element. And you can see that that was up 17% in the overall sales mix year on year. Within that, the franchise like for like was 7.5%, seven point four %. Don't usually reveal that, but I think actually it's important to note that actually that's becoming, it's 20% of the estate. And it's just sort of like, I guess, a backdrop and those locations are in sort of areas where we've seen stronger like for like than we see in perhaps some of the traditional high streets.

[Richard Hutton, CFO & Executive Director at Greggs]

That impact is mirrored in our own company managed estate where those sites which people typically access by car rather than on foot have been more robust and performed more strongly. And that's mirrored in the year to date trading as well where the franchise estate system sales growth is actually stronger than the company managed estate. Moving on then to Slide 10 and the structure of the P and L. So in margin terms, what we're seeing here is almost a reversal of what we've had in recent years where when inflation was very much coming from food, that was putting pressure on gross margin. As we've seen food pressures sort of go perhaps slightly into reverse, we've seen some expansion of the gross margin.

[Richard Hutton, CFO & Executive Director at Greggs]

And the pressure comes through in the distribution and selling cost line, which is where the wage costs are. And obviously, wages are where the primary location sorry, primary inflation has been and our overall pricing recovers inflation across the breadth of the cost base. Perhaps the other feature just coming through here is in admin expenses, where technology is just becoming a bigger part of the business and reinvestment in better tech, both in ERP terms in our shops and back offices, is driving a higher cost ratio in the admin area. But across the business as a whole, our efforts to both offset cost and recover through pricing were successful and we expanded the profit margin very slightly as you can see here. At the bottom there, return on capital employed is a key metric for us in terms of managing the business over the long term.

[Richard Hutton, CFO & Executive Director at Greggs]

As expected, we came off the high point of 2023. And one of the things to note is that we did capitalize the lease of the new Derby site that we're bringing into operation next year. That was capitalized in the autumn of twenty twenty four and goes into capital employed, which you'll see in a few slides' time. Moving on to costs then. The usual chart on Slide 11, which gives you the overview of our cost base.

[Richard Hutton, CFO & Executive Director at Greggs]

So as you'll be aware, the biggest costs we have are people costs and Food and Packaging. On the Food and Packaging side, it was marginally deflationary last year. And we expect probably single digit sort of input cost inflation on Food and Packaging in the year ahead. I think that's consistent with some of the news flow you're starting to hear now from the grocery trade as well. And we've got about five months forward cover as we sit here today.

[Richard Hutton, CFO & Executive Director at Greggs]

So still some uncertainty over the second half and what that will do for overall cost inflation, but certainly a good planning horizon in terms of our own cost recovery. Energy is very expect to be very slightly inflationary, but we've got very good fixed cover on energy we bought forward particularly on electricity last year. So we very much know what we're in for there. And on the people cost, this is where the bulk of the inflation will come from in the year ahead. So last year, bundling together both wage salary and pensions inflation, it was about 9.5 in that area.

[Richard Hutton, CFO & Executive Director at Greggs]

We expect about 8% wage inflation looking forward. That includes both the national living wage increase, but also the increases to National Insurance, which on their own are about 1% cost inflation for the business. It's about million worth of inflation that comes from the changes to National Insurance, not just the rate obviously, but the way that the threshold was reduced. And shop occupancy costs continue to be a pretty benign part of the overall cost base. So across the piece, we're expecting about 6% cost inflation is our best estimate for 2025.

[Richard Hutton, CFO & Executive Director at Greggs]

So in that environment, obviously, making sure we recover that is important and making sure we stay great value is also important. And I think this is something that we've done well over the last few years. Typically, Gregg's prices are comparable with what you would find in the grocery sector, but a steep discount to the Food To Go specialists. And that's the sort of the balance that we try to tread. We want to be outstanding value when you compare us with somebody else who makes freshly in the shop.

[Richard Hutton, CFO & Executive Director at Greggs]

But the supermarkets tend to hold off each of the fire on absolute price. And the chart you can see on the left shows over the last three years, which is the period obviously when we've seen a lot of price inflation in the market, what's happened to the value ratings of some of the key operators in the Food To Go specialist market. So these are the people who make on-site, not the supermarkets. Greg is the yellow line at the top. And you can see that broadly through that piece, we've maintained our rating in terms of value with consumers and I could argue slightly improved it over that period.

[Richard Hutton, CFO & Executive Director at Greggs]

And if you then look to the competitors, which are the gray lines, typically, they've seen a deterioration in their value rating. Typically, they're charging more. And therefore, I guess, the compounding effect of inflation has made that gap to the Greg's value proposition even more profound. So I think it's a we share it because it's sort of, I guess, to some degree, reassurance that although we've had to move prices more than we typically feel comfortable doing, it's been in the context of a market that's behaved rationally. And the result has been that people have actually sort of seen Greggs as being even better value than they saw beforehand.

[Richard Hutton, CFO & Executive Director at Greggs]

So we should feel confident going into the year that we should be able to continue to both mitigate cost inflation where we can, and we did that very well last year, almost million worth of cost offset, but also carefully moving our prices where we need to, to make sure that we recover the cost inflation that we're seeing coming in. Turning then to the investment program. So this is the peak of the investment program that we've been talking to you about for a few years now. So you can see on Slide 13, we've laid out the usual categories of expenditure. And you'll see that on the retail side, it's fairly steady in terms of the number of shops that we are opening, the deployment of additional equipment for the new categories that we are seeing growth in and the refurbishment of the existing estate.

[Richard Hutton, CFO & Executive Director at Greggs]

But the big growth is in the supply chain where we've been ramping up the investment in the two big new sites at Derby and Kettering. And this will be the peak year when we're building on both of those sites as I'll show you in just a second. So we expect capital expenditure around GBP 300,000,000 in the year ahead. And as I've said, a relatively steady investment in both the new shops and the refits. Now these are the new shops that we add to our estate.

[Richard Hutton, CFO & Executive Director at Greggs]

On top of that, you then have further openings from franchise partners and then closures, which generally relate to relocation of shops. So this is trying to pull out the CapEx impact of our opening program on Greggs. If we think about that shop program, why are we so confident in opening a lot more shops and building capacity for them? Well, the answer is we get great returns on our new shops. So we've laid out a bit of a chart here which describes the sort of the maturity pattern and the pace that we see these come through because people often ask us, well, what happens when you open new shops?

[Richard Hutton, CFO & Executive Director at Greggs]

Well, here are some examples from the cohorts of shops we've opened over the last three or four years. If you scan to the chart at the top right, you'll see the overall return on investment that we make on the whole estate, which is a handsome sort of 38% ROI, but that's on shops which are very mature and very established. You then see the cohorts of shops and how they mature over time. So the most recent cohort that's measurable is 2023, typically sort of starting around that level just below sort of 15% ROI. And we needed to get to 25% to meet our investment criteria.

[Richard Hutton, CFO & Executive Director at Greggs]

And you can see that they get to that point after about broadly two years of opening. And there's a fairly predictable pattern that they go through. You can see the '22 cohort are almost there and the '21 cohort are already north of 30%. So we're very pleased with the profile of those. They continue to give us very good returns.

[Richard Hutton, CFO & Executive Director at Greggs]

And it's about extending the Greggs reach. These new shops are going into areas where we're underrepresented. So equally, we're happy that the risk of cannibalization on these new shops is really very limited. So we're making strong returns. Typically, as I say, they pay back in two to three years.

[Richard Hutton, CFO & Executive Director at Greggs]

And at the same time within this, we're also relocating some of our core legacy estate, which we believe has got further potential. So some of the old high street shops are just kind of outgrowing the small old bakery shop can't cope with the amount of volume that we're seeing in the new model. So they typically those relocations have above average returns and typically we're sort of super happy to do those because you kind of know what you're getting with a relocation. You've got an established customer base, you know the market, you've got a very experienced shop team and we just liberate them. In fact, the lady you served you coffee outside is a classic example.

[Richard Hutton, CFO & Executive Director at Greggs]

She runs the East Cheap Shop in London. And if anybody knows the old East Cheap Shop, it was horrible. I don't mean that in horrible, horrible way. I mean, it was very cramped and very difficult to operate. She's now got a beautiful white shop that she operates and seriously ask her about it.

[Richard Hutton, CFO & Executive Director at Greggs]

She loves that shop because it's liberated her to grow the sales and that's the story really with relocations. So with strong returns on shops, we obviously want the capacity to do more. So on Slide 15, you can see the phasing of the investments that we're making and sort of the accompanying narrative. So as I say, the investment in retail and also some of the other back office stuff we do, which is the yellow bar in IT, is relatively stable. We're doing quite a bit in IT at the moment with reinvesting in our SAP ERP infrastructure.

[Richard Hutton, CFO & Executive Director at Greggs]

We're moving to the latest version of that. But the real peak is obviously in the blue bars, which are the supply chain. So So you can see in the last year, we finished and commissioned an additional production line at our big savory plant in Newcastle Upon Tyne, Balliol Park. So we've now got four production lines making our famous bakes and rolls. And we extended two of our distribution centers in Amesbury, in Wiltshire and in Birmingham, which has given us about 300 shops extra capacity.

[Richard Hutton, CFO & Executive Director at Greggs]

And we started work at the Derby site last year as well. So our landlord was doing the works up until the autumn and then we moved inside during the autumn and have started to do some of the fit out. And that's the theme of this year. 2025 is fitting out the Derby site. Roshin will show you a lot more on that in just a moment, which is due to open in 2026.

[Richard Hutton, CFO & Executive Director at Greggs]

And then in January, we bought the land for our new Kettering distribution center. So we are now on-site and we'll be building that through this year ahead of our 2027 opening. So you can see how the CapEx comes off significantly next year and then it steadies out from 2027 into what we would see as a more going level beyond the investment phase. And we've added the red line to this chart, which shows you how capital employed grows through this period. So you can read that against the right hand chart sort of axis.

[Richard Hutton, CFO & Executive Director at Greggs]

So you can see it starts from reading that, it looks like it's about $950,000,000 as we come into this year and rises to just above billion as we exit in 2028. And you can see the shape of it. Obviously, we're investing and redeploying both cash and cash flow into this program in the current phase and then it starts to steady out as you come through. And obviously, you thought that was perhaps helpful to those of you trying to model the shape of return on capital employed particularly as we go through this phase. On Page 16, we're trying to give more detail again to help you to sort of model the impact of these new sites because a lot of questions through the back half of last year about when does the depreciation kick in and what's the impact of opening these sites.

[Richard Hutton, CFO & Executive Director at Greggs]

So we've tried to give you as much as we can some of the phasing here. So for the two big sites that are coming on board, we've given you the kind of the investment terms, including for Derby, the shape of the lease that we've entered into over a twenty five year period. And then in half years over the next three years, we've given you an overview of how we expect those projects to run and when we expect them to go live. So just briefly, on Derby, obviously, this is the year where we are fitting out the site, getting all that logistics automation inside, putting in the first production line. But there will be some OpEx that will start to creep in, in the second half of the year as we recruit the management team and start to incur some sort of utility costs.

[Richard Hutton, CFO & Executive Director at Greggs]

Roll into 2026 and we go live in Q2 at Derby, And therefore, there's obviously a step up there as the depreciation kicks in, business rates, all of those normal site costs, management teams, those sort of things. And then in the second half in Q4, we expect to start to go live with the production element of Derby as well. So again, there's a bit of a depreciation kick there. And that should annualize as you go through 2027. So again, you sort of see the full cost of the additional site kicks in there.

[Richard Hutton, CFO & Executive Director at Greggs]

Kettering, the second line, runs about a year behind that. So we've only just got the land in Kettering. So this year is about building that shell. And then next year is about the fit out inside, getting all the logistics operations going, and we'll be commissioning it at the end of next year. So what you see with Kettering is then the kind of the actual sort of depreciation and other costs kick in really at the start of 2027, and we should be fully live by the end of that year.

[Richard Hutton, CFO & Executive Director at Greggs]

So we've tried to give a bit of a steer on what that might mean and hope this is helpful in terms of OpEx. So we think next year, 2026, you'll probably see about a 40 basis points OpEx headwind as we carry cost related to the Derby site step up. And then probably another 40 as that annualizes and we start to get into the Kettering costs in 2027. Now from 2027, of course, there's a mitigation starts to kick in because we start to grow into the capacity as well because this is a step up in capacity within the business. We'll be filling shops in our existing capacity through 'twenty five and 'twenty six.

[Richard Hutton, CFO & Executive Director at Greggs]

But as we go into 'twenty seven, we start to use the new site's capacity. And that's the story then as you exit this and go forward is that we are opening new shops, but we've already got the supply chain capacity and we've taken the cost already. So it's about the shape. It doesn't change the long term either potential or profitability or returns in the business. We still think aiming for a 20% ROCE is absolutely where this business should be in the medium term.

[Richard Hutton, CFO & Executive Director at Greggs]

But hopefully, it gives you a bit of help in terms of modeling this forward because we kind of got the feeling that people didn't quite know how to put the pieces together. So hopefully, that's useful. Very happy to sort of talk to you more about that later, as is Dave. So just to conclude, the perhaps less exciting bits on tax, EPS and dividend, although hopefully, the dividend is at least exciting. We've talked a bit about the tax rates.

[Richard Hutton, CFO & Executive Director at Greggs]

The only other sort of bit of color on tax is that the exceptional gain had a relatively low tax rate due to the availability of some capital losses that we're able to offset against that. EPS, we've already talked about. And the ordinary dividend, as Regine said, 50p per share, which adds up to a 69p ordinary dividend for the year as a whole. And as usual, that's twice covered by earnings, so a 50% payout ratio. And then finally, on the balance sheet, I mean, it's one of the features of Greg's that we always maintain a very strong balance sheet.

[Richard Hutton, CFO & Executive Director at Greggs]

You can see the strength of the cash inflow. So GBP 250,000,000.00 of net cash inflow from operating activities puts us in a very good place for the phase that we're in. As we invested, you saw the net cash position come down to £125,000,000 on the balance sheet at the end of the year and that will be deployed further in the year ahead, of course. And we've talked about the finance income should start to normalize from this year because of that balance coming down. But in reserve, we also have, just to reassure you on liquidity, million revolving credit facility, which is available to us to supplement that.

[Richard Hutton, CFO & Executive Director at Greggs]

And as usual, the capital allocation, our priorities are look after the core business, keep that strong and healthy, keep a strong balance sheet. We think as a guidance, keeping about 3% of revenue is probably a good way to kind of model what we think is a good net cash position to cope with the working capital needs of the business. Maintain that attractive ordinary dividend as we've described and then selectively invest to grow. Clearly, that's the mode we're in at the moment, investing for the growth in the medium term. And then as we get through that phase and the CapEx comes off wherever there's surplus cash, we would normally return that by way of special dividends.

[Richard Hutton, CFO & Executive Director at Greggs]

So that's the financials. I'll hand you back to Rasheen now who can add some color on the strategic overview.

[Roisin Currie, CEO & Executive Director at Greggs]

Great. Thank you for that, Richard. So let me just touch on the winning growth strategy. So this is a quick reminder of the strategic growth drivers that we've talked about to you for a few years. We remain very focused as a team on delivering.

[Roisin Currie, CEO & Executive Director at Greggs]

I will just go into each of these in a few minutes and talk about each of the various strands. But firstly, let me spend a few moments on menu innovation, which sits at the heart of Greggs and will always be key to our success. So our new over ice drinks range was introduced last year. It is now rolled out in over 1,175 of our shops. So we have we have options such as the iced latte, the cloud lemonade, which are proving very popular, and we have more flavors planned over the coming months to excite our customers.

[Roisin Currie, CEO & Executive Director at Greggs]

We also launched our ready to drink versions of our latte and our caramel latte, and that's really to enable customers to have their coffee whenever and whenever they want. And then we've talked to you before about our made to order hot chicken and fish finger wraps and burgers. They are selling well, and we continue to roll those out. And currently, we already have them in more than 200 shops across the chain. Now we know that those products work really well, particularly for the evening consumer.

[Roisin Currie, CEO & Executive Director at Greggs]

However, what is really pleasing is they're proving very popular at lunchtime too, which is great. And what we've done is we've ensured that they are at great value price. So it's £5 for the wrap, for the wages, and for the drink. So we're replicating what we did really well at breakfast, a great quality product at a value leading price, which is really important. And then I've mentioned the piece around making sure that we continue to broaden our customer appeal.

[Roisin Currie, CEO & Executive Director at Greggs]

I've touched on some of the areas mentioned earlier on in the slide deck. However, I think it's really worthy to confirm that we have maintained our number one position for food to go breakfast visits. And as I've already said, we continue to work hard with our menu innovation to ensure we have offerings for the food to go consumer right across all of the dayparts. Now you'll also be aware that we have a lot of fun at Greggs, and we do some tongue in cheek marketing to really engage and excite and enthuse our customers and hopefully you as well in this room. So, we did launch the baked in gold jewelry last year, and that coincided with London Fashion Week.

[Roisin Currie, CEO & Executive Director at Greggs]

We also partnered with Fenwick. I don't know if any of you made up to the Northeast, but we had our Greggs pop up champagne bar over Christmas. And then at Christmas, who better to launch our festive bake with than Nigella Lawson, who epitomizes Christmas. And again, that really enthuses, excites customers. We get a lot of talkability on social media, and we will continue to do plenty of more of that in this year.

[Roisin Currie, CEO & Executive Director at Greggs]

So, please watch this space. But I think it's just interesting to step back and look at the significant strategic changes that we've made to our shop estate over the last ten years. Back in 2024, as you can see from the chart on the slide, more than 80% of our shops were in what you would describe as high street locations. Since then, we've relocated a lot of those shops to better locations. We've also found opportunities to open new shops, ensuring that we maintain that strong high street presence, which is really important for our delivery channel and also gives us a strong diverse shop portfolio.

[Roisin Currie, CEO & Executive Director at Greggs]

And in total, we have relocated, opened or closed 500 shops on the High Street over that time. But really importantly, when you look at the net growth, you can see that that has come from locations where we are underrepresented. And we've talked to you many times about the roadside, the transport hubs, the retail parks, the supermarkets. So when you look at the Greggs Estate today, you see a very different balance with these newer locations making up almost half of the estate. And really importantly, as Richard mentioned earlier, these are delivering very strong returns for us.

[Roisin Currie, CEO & Executive Director at Greggs]

But there is a lot more growth in the horizon as we continue the strategy of being more convenient for our customers as they go about their busy lives. I said earlier, we opened more than four shops every week in both 2024 and 2023, and we continue to good momentum in our forward looking property pipeline with a focus on the locations that I've just mentioned that were underrepresented. We ended 2024 with 2,618 shops, and we continue to be confident in our opportunity to have significantly more than 3,000 shops right across The U. K. But in fact, we're building capacity for up to 3,500 shops.

[Roisin Currie, CEO & Executive Director at Greggs]

So why are we so confident in the opportunity that lies ahead? Well, the map of The U. K. That you can see behind me is shaded green to show you where we are most densely represented. The very darkest green shows you where we have shops serving a population of around 15,000 people.

[Roisin Currie, CEO & Executive Director at Greggs]

And you can see that in Northern England, Central Scotland and parts of South Wales, we're extremely densely represented in those areas, but we continue to still open and that's opening in these underrepresented catchments. However, you can clearly see by the very lightly shaded areas just how much opportunity we still have to go after right across The U. K. There are lots of areas across The U. K.

[Roisin Currie, CEO & Executive Director at Greggs]

Where you still cannot access Greggs. And a really good example we've pulled out and magnified to the right of the chart is the square that represents London. So with over 9,000,000 people in London, you can see just how much opportunity there is for us. So in the year ahead, we aim to open again between 140 to 150 net new shops, which again means from a gross number, we will open more than 200 shops this year, including our relocations. However, it's not just new shops that are important to us, and I've said this before, it's also making sure that we take the opportunities to relocate to bigger and better locations and refurbish shops in great locations to ensure that we can provide the consumer with that multichannel Food2Go offering.

[Roisin Currie, CEO & Executive Director at Greggs]

Last year, we relocated a record 53 shops and we're planning for a similar number this year. And Richard's mentioned the importance of that. These shops see an average of 30% increase in sales in that first year after opening. And we also refurbished 165 shops last year and have a plan to refurbish a similar number this year. Again, really important because that ensures we improve our ability to serve hot food and meet demand for delivery and digital channels for our customers.

[Roisin Currie, CEO & Executive Director at Greggs]

Now on to evening trade. So let me talk about extending our trading hours. Evening continues to be our fastest growing day par and now represents 9% of company managed shop sales. So we're making good progress. We know that over 35% of the food to go market is after 4PM, and our hot food items such as the chicken gougeons, the pizza slices, and the hot sweet options are very popular along with the core freshly baked menu.

[Roisin Currie, CEO & Executive Director at Greggs]

We also launched last year a new barbecue pizza flavor. And as well as our six slice pizza box, we introduced a four slice version. Both pizza boxes can be customized to suit different tastes and a great value price to feed all the family. And we have more innovation planned for 2025. Our most recent launch is our mac and cheese, which you've just launched across The UK, and our customers are already telling us it has become a real favorite.

[Roisin Currie, CEO & Executive Director at Greggs]

And really important, we do lots of quirky marketing, but we also do really simple messaging. Our messaging on evening is simply we are openly really making sure that we drive that awareness. And then on to our digital channels, which continue to move forward at pace. Delivery offers another channel to be able to access our offer in a way that is convenient for customers. So we've got our two delivery partners, we've got Uber Eats and we've got Justeats, and we now have fifteen fifty six shops across The U.

[Roisin Currie, CEO & Executive Director at Greggs]

K. That provide that service to our customers. Really pleasing, last year, that increased by 31 on sales as we meet our ambition to extend the geographical reach right across The UK. And there's also been continued strong growth in the use of our Gregs app. I said earlier, one in five transactions are now scanned through the Gregs app, and that's increased from just over 12% the year before.

[Roisin Currie, CEO & Executive Director at Greggs]

It's really important to us because we know that customers that use the app drive more frequency of purchase. And then we can use the behavioral data that we get from the app, and our CRM system then allows us to send you personal messages that are timely and relevant, and we have a very high opt in rate as a result. That allows us to do things that are tactical such as driving double stamps to drive evening awareness. And then we know that once we get you trying evening awareness, trying evening menu, then actually you continue to do so in the months after the double stamp promotion. Richard mentioned supply chain, really important because we would not be able to deliver our growth plans as a vertically integrated business without growing the capacity of both our supply chains and our systems.

[Roisin Currie, CEO & Executive Director at Greggs]

Our manufacturing investment that Richard mentioned has already enabled an extra 35% capacity of our iconic bakes and sausage rolls in our savory pant in Newcastle. And redevelopment of Birmingham and Amesbury gives us logistics capacity for a further 300 shops. And our two new state of the art sites in Derby and Kettering are on track. So on the top right, you will see a photograph of the Derby site showing just how much progress we've made on that site, a frozen manufacturing logistics site, and it will come in on stream, as Richard said, in 2026. Below it, it's actually an artist's impression, although it looks very similar, but that's the national distribution center for chilled and ambient goods, that we're just starting to build in catering.

[Roisin Currie, CEO & Executive Director at Greggs]

And then as Richard has mentioned, we continue to invest in technology. So that is the SAP, SAP, ERP, S4HANA. Yep. How many acronyms can you say in one sentence? The ERP system they're putting in.

[Roisin Currie, CEO & Executive Director at Greggs]

But it's also the digital capability that is so important for us, to make sure that we continue to move forward at pace. And then just to mention the Greg's pledge, which continues to evolve and becomes more and more important for us. As a business that has set out to make sure we're doing the right thing, we are delighted with the focus and progress we continue to make against our commitments. We've put some highlights in the slide pack for you. So we have worked with The Gregg Foundation.

[Roisin Currie, CEO & Executive Director at Greggs]

We've met our Breakfast Club target, a year early. We now have 1,000 primary schools. Very importantly, we feed 75,000 school children every single school day. We also opened our 38 outlet shop to reduce food waste and also support the local communities, and really proud to say that more than 30% of our range is now in the healthier choice category. And then the 2,040 net zero carbon target is fully embedded in our business processes, and we've increased the use of renewable fuels with areas such as biogas and hydro treated vegetable oil.

[Roisin Currie, CEO & Executive Director at Greggs]

So in summary, like for like sales and company managed shops grew by 1.7% in the first nine weeks of the year. We did have challenging weather conditions in January. So week two, we had snow and ice right across the Pennines. Week four, we had the storm, which meant there was a red weather warning, and we had to shut two fifty of our shops across Scotland and Northern Ireland. As I've already said, we have got a strong pipeline of new shop openings as we pursue our ambitious growth plans and invest in the capacity required to realize those ambitions.

[Roisin Currie, CEO & Executive Director at Greggs]

We are confident that we can manage the inflationary headwinds and deliver another year of progress. And we've got a strong track record of making sure that we could deliver against those headwinds. And you can see from Richard's slide earlier the value that we deliver to our customers. And we remain very optimistic as we continue to execute our strategic growth plans and realize the opportunities to become a significantly larger multichannel business. We are just going to thank you all for your time today.

[Roisin Currie, CEO & Executive Director at Greggs]

Thank you. Thanks, everyone.

Participants

Executives

• Roisin Currie, CEO & Executive Director
• Richard Hutton, CFO & Executive Director