4. Greggs Plc

Baking Profits – Sausage Rolls and Snacks on the Go

Greggs Plc is a British high street favourite, best known for its sausage rolls, pasties, and bakes. It makes money by selling affordable, freshly made food and drinks through its chain of bakery shops, catering to people looking for a quick, budget-friendly bite. Operating in the food retail industry – specifically the “food-to-go” sector – Greggs targets busy workers, students, and shoppers who want something tasty without breaking the bank.

The company’s main revenue comes from its 2,500-plus shops across the UK, where it sells a mix of hot and cold food. Think sausage rolls, steak bakes, sandwiches, and doughnuts – often paired with a coffee or soft drink. Greggs keeps prices low, with most items under £4, making it a go-to for a cheap lunch or snack. It bakes fresh daily in-store or at regional hubs, which keeps quality high and costs down. Beyond its traditional savoury staples, Greggs has expanded into healthier options like salads and vegan-friendly items – its vegan sausage roll, launched in 2019, became a massive hit. The company also makes money through delivery partnerships with firms like Just Eat and Uber Eats, tapping into the growing demand for food on-demand.

Greggs operates a “click and collect” service and has a loyalty app, letting customers order ahead or earn rewards, which boosts sales. It’s also been opening more drive-thru locations and late-night stores to catch evening crowds, especially in busy urban spots. The business model is simple but effective – high footfall locations, low prices, and a menu that appeals to a wide crowd. In 2024, Greggs reported revenues of £1.8 billion, up 13% from the previous year, with plans to open 150 more shops by 2026.

Based in Newcastle upon Tyne, Greggs employs over 32,000 people and has a knack for staying relevant, whether through seasonal items like festive bakes or social media buzz around new launches. It faces competition from supermarkets and fast-food chains, but its focus on value and convenience keeps it a high street staple – a rare success story in a tough retail landscape.

Greggs is a high-quality business that has been well-run for many years. However, its growth now appears to be reaching maturity. With over 2,500 locations across the UK, the potential for further expansion seems limited.

The most obvious growth avenues from here – launching a new store format or expanding internationally – come with considerable risks. Any new format would still need to centre around convenience and baked goods to maintain operational synergies. As for international expansion, it's difficult to see Greggs' model working overseas. Imagine a Greggs attempting to displace boulangeries in France – highly unlikely.

With little remaining runway for growth, Wonder Stocks sees no compelling reason to explore Greggs in greater detail. However, for those interested, Jamie Ward, the author of this Wonder Stocks piece, has an article on Greggs' value play set to be published in MoneyWeek.