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Even the name of Greggs implies plurality. The UK-listed baked goods chain opened a net 82 shops in the year to September. It plans to operate 3,000 stores by the end of 2026, up a quarter from today.
But could Britain have already reached Peak Greggs, the market as saturated as the fat in some of its snacks?
Greggs is well run. It has a winning business model: affordable comfort foods such as sausage rolls and doughnuts served fresh in places of high footfall. A third-quarter trading update reported a 14.2 per cent increase in like-for-like sales in the outlets Greggs manages in the 13 weeks to September 30.
But despite healthy sales growth and optimistic City growth forecasts, the share price has flagged. It has dropped nearly 13 per cent since March, more than the broader market.
One signal that Greggs may be a few sprinkles short of a topping is its weakening valuation. Double digit earnings growth is expected this fiscal year, though a little more slowly than revenues. A forward price-to-earnings ratio of about 20 times has dipped from a high of 24 times this spring. But there is no evidence of a progressive derating.
More positively, Greggs should have no trouble paying for its expansion if sales hold up. Average free cash flow is forecast at £100mn annually until the end of 2026. Net debt is very low at only half forward ebitda.
Greggs has been bulking up in the south, but its stronghold remains the northern half of the UK, particularly in its home territory of Newcastle as well as Glasgow and Nottingham.
For the moment, the bulk of shops are company-owned. But franchising is giving it an opportunity to grow at low capital cost. This model enables it to open shops on petrol forecourts, while also producing very high margin fees.
Franchises have expanded by more than 10 times since 2014 to a fifth of all shops, notes Alex Chatterton at Panmure. Many more could be added.
Peak Greggs is therefore a long way off. Take snacks, in case you get hungry on the way. Doughnuts, maybe.
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