Looking at the price chart for Greggs (LSE:GRG) shares takes me back to my childhood. In particular, the ‘The Ultimate’ rollercoaster ride at Lightwater Valley that had two big hill climbs followed by steep drops.
For Greggs, this has included two 50% drops in the past five years — in 2022 and then again between 2024 and 2025 (and carrying on into 2026). There was a particularly terrifying white-knuckle descent in January 2025 when the FTSE 250 stock lost 25% in a few days.
Over a five-year period, Greggs is down 34.6%. This means the same five grand that would have bought 214 shares five years ago would now get 327 shares.
But does that make the stock a dip-buying opportunity worth considering?
The what
Zooming out, we can ask two separate questions. What has caused the fall? And why?
First, it’s crystal clear that slowing growth has caused the stock to fall since 2021. Valued as a high-growth food retailer, Greggs had to keep growing at a decent clip to maintain that valuation.
But it didn’t, as the table below clearly shows. Note, 2021 followed Covid, so the figure is artificially high.
| Like-for-like sales growth (%)* | |
|---|---|
| First nine weeks of 2026 | 1.6 |
| 2025 | 2.4 |
| 2024 | 5.5 |
| 2023 | 13.7 |
| 2022 | 17.8 |
| 2021 | 51.6 |
During this time, Greggs has gone from 2,181 shops to 2,739, increasing sales from £1.23bn to £2.15bn. Yet profitability has been under pressure, with the operating margin falling from 12.5% in 2021 to 8.5% last year.
Stepping back then, we might conclude that while Greggs has been getting bigger, it hasn’t necessarily been getting better. Quality growth should ideally make the company more profitable as it scales, or at least maintain profit margins. And this hasn’t been happening.
Why?
As for why, there have been a number of factors affecting Greggs’ growth and profitability.
These include the cost-of-living crisis, cost inflation (fuel, raw ingredients, etc), higher employer National Insurance contributions, and a smaller potential impact from GLP-1 weight-loss drugs.
There isn’t much Greggs could have done to prevent these things. It has no control over interest rates, oil and fertiliser costs, government policy, and more people using diet medication.
Cautious optimism
Given these issues, it’s easy to see why many investors are bearish on the stock today. However, I’m cautiously optimistic that things will improve over the next five years.
Last year, underlying pre-tax profit declined 9.4% to £171.9m. But management said in March that it expects profits to remain around that level for 2026. So 2025 could be the nadir.
Over half of Greggs’ new openings are located in petrol stations, supermarkets, retail parks, hospitals, university campuses, and airports. So it’s diversifying away from high streets, many of which are sadly experiencing declining footfall.
Therefore, to my mind, the chance of Greggs remaining the UK’s ‘food-to-go’ leader is very high. Competition from smaller chains and cafes is disappearing as the UK economy struggles on. Greggs grew its market share by 0.5 percentage points to 8.6% in 2025.
Plus, in mid-2026, a new manufacturing and frozen-product facility becomes operational, followed by a state-of-the-art distribution centre in 2027. These introduce more automation, which should improve efficiency.
And with capital expenditure on theses facilities having already peaked, free cash flow is expected to more than double by 2028.
Add this to today’s 4.5% dividend yield and I think Greggs is worth considering today for long-term investors.
