How are Greggs (LSE: GRG) shares doing? Looking at store numbers, you would imagine pretty well. In 2025, the nation’s biggest bakery chain passed the staggering figure of 2,700 locations up and down the country. With another 120 slated to open in 2026, there might soon be two Greggs stores for every one McDonald’s in the UK.
But despite the undeniably rapid growth in the number of Greggs outlets, the share price has been collapsing like a house of cards.
The drop
In August 2024, the share price was close to £32. In February 2026, the share price has fallen all the way to £16. The drop is almost bang on 50%.
While three separate dividends were paid to shareholders over the timeframe, they were not enough to touch the sides. In total, a £25,000 stake in Greggs shares 18 months ago is now worth approximately £13,334.
What on earth happened here? And are Greggs shares looking like a bargain at ‘50% off’?
To answer the first question, it’s worth looking at what happened when the firm posted a trading update in January. Sales increased yet again and total revenue climbed above £2bn. Not bad, right? Well, the share price dropped 7% on the day.
The main reason is worsening growth prospects. Yes, Greggs is still growing, but it’s looking like it will be slower than previously anticipated. One cause of this is believed to be the proliferation of appetite-suppressing drugs. Analysts at Jefferies recently downgraded the stock, citing the long-term impact of GLP-1 medicines.
The thinking goes that folks taking Wegovy or Ozempic are much less likely to pop into fast food outlets for a small (or large!) snack. With 65% of British adults overweight or obese and just 3% currently taking these medications, this is a trend that could become much, much more pronounced.
Adding fuel to the fire is pressure on the firm’s margins. It’s no coincidence that the decline in the Greggs share price was around the time of the government’s first budget. Those increase Minimum Wage and National Insurance costs hit a firm that employs over 30,000 hard. The bakery is now making that bit less on each vegan sausage roll or steak bake. Other issues are squeezing margins too, notably the effect of inflation up and down the supply chain.
Rebound?
That’s the bad news out of the way, what’s the good stuff? Is there any reason to buy here?
Well, the main value proposition of Greggs is that it’s just about the cheapest place to get some grub on the high street. Through economies of scale and it not having to pay hot-food VAT (by not heating its pasties after being cooked to keep them warm), the big bakery offers a bargain basement place to get lunch. As cost-of-living pressures continue to rise, this could be a path to gaining more market share.
And with the shares seeing such a dramatic fall, investors can scoop up a 4.29% dividend on a stock trading at just 11 times earnings.
The future is undeniably uncertain here, but I think this is a stock with rebound potential. It’s one investors who are aware of the risks could consider.
