Investors still have a hearty appetite for Greggs' shares as its sales increase by £167m

PUBLISHED: 10:08 10 January 2020 | UPDATED: 10:08 10 January 2020

Greggs has launched a vegan steak bake. Picture: Autumn Lewis

Greggs has launched a vegan steak bake. Picture: Autumn Lewis

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Last year, consumers spent an extra £14 million a month buying Greggs' products, says Peter Sharkey, suggesting that owning a slice of the bakery brand could become a sound investment.

It was only when the train rolled in to Manchester Victoria station last Tuesday morning that I realised I'd missed breakfast. I was famished.

An unexpected rumbling in the stomach confirmed the need to satiate my appetite; upon disembarking the train, therefore, I mulled over several options.

Wait for lunch, although that was likely to be at least three hours away.

Head to my appointment and hope that a large tray of warm pain aux raisins and croissants topped (or were very close to topping) my meeting's agenda.

Grab something at the station to take the edge off my burgeoning appetite.

Scanning the station's available eateries was, initially at least, less than inspiring, but the waft of freshly baked savouries drifting across the concourse suggested that option three would be difficult to resist.

It's years since I last visited a Greggs outlet. This has absolutely nothing to do with adopting a sniffy view of their products (I actually enjoy most of them - who wouldn't like a Belgian bun?) and everything to do with the fact that the opportunity to pop into one hasn't arisen.

My abiding image of a Greggs interior features several matronly ladies, no-nonsense, super-efficient types, who can take half a dozen orders at once while calculating each customer's bill in their heads and continuing conversation with their colleagues regarding the Duchess of Cambridge's latest outfit.

Greggs at Manchester Victoria was nothing like this. It was a slick operation with computer-controlled ovens, state-of-the-art tills and payment methods; it was also well-staffed which meant its hot food was served rapidly. In many respects, it was akin to the type of operation McDonalds has perfected over several decades; Greggs now competes on a level footing.

Much has been written recently about Greggs' range of vegan-friendly products, the popularity of which has, apparently, outstripped the company's expectations.

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This partially explains why, on Wednesday, the company announced that its pre-tax profits, scheduled to be released in March, are forecast to be "slightly higher than previous expectations".

Greggs' chief executive Roger Whiteside said the company had enjoyed a "strong finish to what has been an exceptional year," before announcing that the bakery chain will reward its staff with bonuses totalling £7 million.

This is an example of terrific management. Rewarding the people who spend their working days serving customers with sausage rolls, Belgian buns and vegan-friendly savouries makes enormous sense, especially when the bonus came as a complete surprise to most of them. Moreover, while the bonus doesn't quite fall into the king's ransom category, receiving a £300 payment at the end of January as credit card and other bills drop through the letterbox will, I suspect, come in very handy for many of Greggs' employees.

Mr Whiteside said he was delighted that Greggs will be "making a special additional payment to all of our colleagues across the business who have worked so hard to deliver this success in what has been a phenomenal year."

Indeed it has. Greggs' share price has risen by a staggering 82% over the past 12 months; it has virtually trebled over the past five years. Today, the company, which has around 2,000 shops across the UK and employs 25,000 people, is worth more than £2.4 billion.

A year ago, Greggs reported impressive annual sales of £1.03 billion but in March is expected to announce that figure has increased by £167 million. In other words, throughout 2019, customers were spending an extra £14 million a month on Greggs' pasties, sandwiches and its vegan range.

Recently, the company added a 'vegan steak bake' to its menu as well as its first vegan doughnut and plans to develop its product range "to suit a broad variety of dietary choices."

However, it's the traditional range which accounts for the lion's share of sales.

Savers mulling over the attractions or otherwise of investing in Greggs should note that the company believes it will face 'headwinds' over the coming year in the form of an increase in the national living wage as well as other forms of 'cost inflation', such as the rising cost of pork.

Nevertheless, savers who believe that companies capable of satisfying our changing dietary requirements will continue to do well may consider owning a slice of Greggs to be the investment equivalent of buying a delicious Belgian bun.

TAM Asset Management Ltd offer savers the opportunity to invest their savings in Investment ISA portfolios comprising a variety of different funds pursuing cautious, balanced or adventurous strategies. For further details, please visit the MoneyMapp website.

For more financial advice, check out Peter Sharkey's column, The Week In Numbers.

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