Greggs (LSE: GRG) is one of those very British companies. Most people in the UK are familiar with its famous sausage rolls, pies and pastries. But despite its popularity, its shares have had a rough ride this decade.
The share price has fallen sharply in the past 12 months, racking up a total loss of roughly 26% since February 2021. So if someone put £5,000 into Greggs’ shares five years ago, they would now be worth a meagre £3,700.
But the picture isn’t quite as bad once dividends are included. Greggs has usually paid shareholders a dividend of around 2%-4% a year, with a five‑year average of about 2.3%. On £5,000, that might add up to roughly £600 in income over five years, depending on timing and exact prices. So overall you might be sitting on maybe £4,300 in value – still down, but not a total disaster.
So why have the shares fallen when the business itself is still selling loads of pasties?
Rising costs strangling margins
On paper, Greggs actually looks solid. Revenue has grown from about £1.8bn in 2023 to just over £2bn in 2024, up more than 11%. Profits have also been rising, and earnings per share went from around 141p to 151p over that period. Recent trading updates show sales still growing in 2025. Like‑for‑like sales are up about 2%-3% and total sales up around 7% year‑to‑date.
The estate keeps expanding too, with more than 2,600 stores and plans for up to 3,500 over time.
The problem is more about expectations and costs. A couple of years ago, the market got very excited and pushed the share price up so high that it traded on a price‑to‑earnings (P/E) ratio above 22. Now the hype’s cooled and the P/E’s down to around 11. At the same time, margins are squeezed by trading negatives such as higher Minimum Wage, higher Employer’s National Insurance, and general cost inflation.
Management’s warned that profits could be flat even with sales still growing. On top of that, UK consumers are still feeling the cost‑of‑living crunch, so even a ‘cheap treat’ on the high street can be a stretch for some people. Plus, there’s early signs that weight‑loss injections and a focus on healthier diets might dent demand for comfort food.
Subsequently, investors have grown nervous, hurting the share price.
Still worth considering?
On the plus side, Greggs is a very well‑known brand. It enjoys steady growth in sales, a long runway for new stores, and new ideas like evening meals, delivery, and iced drinks doing well. The valuation’s lower than it used to be, and the dividend yield of about 4.5% is quite tempting for income‑seekers.
On the downside, profits are under pressure from rising wages and other costs, and any further squeeze on UK consumer spending could hurt. There’s also a real risk that tastes are shifting away from traditional baked goods towards healthier (or more premium) options.
For UK investors with faith in the survival of busy high streets, the lower price and higher yield offers income and value that’s worth considering. But unfortunately, it seems no longer a ‘safe bet’ growth story – it’s a solid but fairly mature business, and anyone buying today needs to be comfortable with slower growth and ongoing cost pressures.
