An 84-year-old homegrown bakery’s footprint is now larger than US-based submarine sandwich chain Subway in the UK.
As of this month, Greggs has 2,400 stores nationwide, topping Subway’s UK store count of 2,300. The Newcastle-based baker has opened 82 net new shops so far this year, and it’s not finished.
The bakery chain—which specializes in savory products like baked goods, sausage rolls, and sandwiches as well as sweet items like doughnuts, anticipates the total net shop openings for the year to come in between 135 and 145—the company said in its third quarter earnings published on Oct. 3. If it can pull those numbers off, 2023 will be “a record year for the absolute number of new shops opened” for the company.
In March, the company had boasted of a “clear opportunity” to have more than 3,000 stores.
Subway and Greggs are near-direct rivals, typically popping up in neighboring locations from petrol stations and grocery stores to cinema halls.
Déjà vu: Greggs has been in pole position before
Greggs, founded by John Gregg as a Tyneside bakery in 1939, used to have more UK stores than Subway for decades by default. The American brand opened its first store abroad in Bahrain in 1984. It took 12 more years, in 1996, for it to venture into the UK at all.
When Subway arrived, Greggs was already an established household name. For instance, in 2008, Greggs had 1,368 outlets in the UK versus Subway’s 1,020. But Subway’s expansion strategy, built largely on the back of franchisees, picked up pace toward the end of the last decade. In 2017, it set a lofty target of 3,000 UK and Ireland stores. It did grow, but not quickly enough to hit that milestone.
Meanwhile, Greggs is growing from strength to strength: stores are staying open longer, seasonal and vegan options keep the menu refreshed, take-away and delivery offerings abound, and its cakes and coffees are selling like, well, hot cakes. Households, weighed down by a cost-of-living crisis, have especially taken to the on-the-go, value-for-money eatery.
Greggs’ UK expansion, by the digits
144: New outlets as of early October
62: Shuttered outlets as of early October
20.8%: Increase in total sales in the three months ended Sept. 30, compared to the same period a year ago
1,928: Total number of company-managed Greggs shops
482: Greggs’ franchised units
500: Shops Greggs will have live on Uber Eats—its new delivery partner in addition to Just Eat—by the end of October, “with further expansion to come in 2024,” as per the company
500: Greggs stores that are open till at least 8pm
300: Stores Greggs plans to extend hours until 9pm starting this year. It applied to make its new Leicester Square flagship a 24-hour operation but the Westminster Council rejected it over concerns that the site would become a magnet for antisocial behavior. However, Greggs did manage to appeal and win the right for the location to stay open until midnight on some days and 2am on others.
Quotable: Greggs’ business sense
“While this is to be applauded, Greggs needs to be careful ambition does not tip over into hubris. Will the brand still be as popular, for example, when economic conditions have improved and people have a bit more money in their pocket? However, the company’s record over a long period provides confidence they know what they’re doing and Greggs can lay claim to being one of Britain’s best-run businesses.”
—Russ Mould, investment director at AJ Bell
Company of interest: Cepac
Cepac, which makes packaging for companies like Subway, Greggs, and Costa Coffee, has been locked in a dispute with its employees. In early August, Unite union workers declared an all-out strike at the UK-based corrugated packaging manufacturer’s Darlington site over a paltry 8% pay raise offer that comes with longer hours, lower overtime rates and a change in shift patterns.
By mid-September, the company said it was “forced to initiate redundancy consultation at the site,” putting around 61 jobs on the line. The company was slammed for its “fire and hire” strategy, wherein employees are let go and subsequently hired back on less favorable terms.
While third quarter results came too early to account for a packaging crunch for Cepac’s customers, this quarter, they might feel the heat. “We have done and continue to do our best to keep our customers supplied, but it is entirely understandable that they will seek supplies elsewhere when Darlington cannot supply,” Steve Moss, Cepac’s group managing director, said.