A £1.50 sausage roll from Greggs is a regular feature of Chris Ng’s commute when he goes to work at St Mary’s hospital near London’s Paddington station.
“I come to Greggs every morning when I work on this site because it’s a good deal,” said the 36-year-old NHS worker, who is based there about three times each week.
The bakery chain’s app allows him to collect stamps that mean his tenth item will be free. “It’s affordable, light and healthier than a hamburger. I think Greggs is the best thing I see when I walk out from the Tube station,” he said.
Customers like Ng have helped propel Greggs to the top of the league table in the UK’s competitive breakfast-to-go market.
The Newcastle-headquartered chain, which started life as a humble bakery in 1951, seized the top spot from McDonald’s around the autumn of 2021 according to food and drink research firm Lumina Intelligence — and has forged ahead ever since.
Like Greggs, the US fast-food giant has gained market share in the UK breakfast-to-go market over the past year, but its 14 per cent is well behind the UK baker, which has almost a quarter, according to Lumina data.
Riding high on the success of savvy marketing and continued expansion, Greggs — which this week announced a 14 per cent rise in first half sales — is now targeting the dinner market.
Chief executive Roisin Currie said that the chain is planning to keep more of its stores open into the evening to cash in on people picking up snacks and meals after work.
The size of the opportunity is huge. Lumina estimates that the overall UK food-to-go market will grow 3.5 per cent to sales of £23bn this year, exceeding its pre-pandemic value by 9.3 per cent, driven by expansion in travel hubs, drive-through and kiosk-style services.
“Many McDonald’s offer a dine-in option,” said Maggie Davis, insight manager from Lumina, and they have more options on offer throughout the day, which makes them “popular across the evening”. On the other hand, she added, “Greggs has a strong focus on grab-and-go affordable convenience, in key transport hubs and high street locations targeting commuters at breakfast and lunch.”
As well as walk-in customers, Greggs says its presence on food delivery apps Just Eat and Uber Eats will boost its sales at night.
But analysts warn that truly cracking the evening business will be tough.
“Through its existing asset base, Greggs will open up a whole new opportunity [for the evening trade] but to be very clear, it is much more competitive than the morning and lunchtime trades,” said Clive Black, head of research at Shore Capital.
Be it pizza, curry, chicken or beef burgers, “there are consummate players in every single facet of the market . . . McDonald’s is much, much stronger in the evening market than Greggs is, and I’m not sure Greggs will ever take McDonald’s in this market,” he added.
However, he acknowledged that one of Greggs’ strengths was the room it has yet to grow. “[McDonald’s is] coming to the reality of maturity and it doesn’t have the growth potential it did 10 years ago . . . [Greggs is] still travelling but McDonald’s has arrived.”
McDonald’s has more than 1,450 outlets in the UK and Ireland, while Greggs has 2,500 stores across the UK. The chain aims to have “significantly more than 3,000 shops” in the UK, according to the company.
Greggs’ performance presents a contrast to that of McDonald’s. The US burger chain said global sales fell for the first time since 2020 in the second quarter as inflation-hit consumers around the world opted to eat at home more often.
Greggs’ pitch to customers has always been value, which it hopes will help it achieve its dinnertime ambitions. The chain, known for its budget offerings, said its pizza deals — which include a slice of pizza and a cold drink from £2.85 after 4pm — are driving later trade.
“Customers really want to make sure that for the money they spent, they get the best value possible,” Currie told reporters as the company announced a 16 per cent rise in its underlying pre-tax profit to £74mn for the first six months of this year and a dividend increase of almost a fifth.
“If you’ve left the house, you’re on the way to work and you haven’t had breakfast, then it’s a really compelling proposition to be able to pop into Greggs,” she said.
Greggs has in recent weeks put up prices of its regular and vegan sausage rolls by 5p to £1.25 for most UK locations — compared with £1 in 2021 — but Currie added that it has not increased the price for any meal deals, including breakfast.
Earlier this year McDonald’s in the UK introduced a breakfast deal, including a sausage and egg or bacon and egg McMuffin as well as a drink, for £2.79.
“We know it’s a competitive market,” said Matthew Reischauer, McDonald’s UK & Ireland marketing director. “We know that value is more important than ever to our customers right now as people face difficult decisions about where and when they spend their money.”
Pret A Manger earned the ire of some customers last month when the chain, whose chicken salads cost £8.30, with almond croissants at £3.40, said it would change its monthly £30 subscription service. The upmarket chain will stop offering a 20 per cent discount on food items and five free barista made drinks per day, and instead charge members £10 a month in exchange for half-price drinks, calling the previous offer “almost . . . ‘too good to be true’”. It lowered the prices of a filter coffee from £1.80 to 99p and a croissant from £2.30 to £1.99.
“It’s a very competitive environment in the UK, because you’ve got some really strong British-based brands,” said Pret chief executive Pano Christou. “I don’t think there is any country in the world that has such a large group of coffee-led businesses serving breakfast.”
