The aroma of freshly baked goods may be losing its pull for Greggs, the UK’s beloved bakery chain. While still a mainstay for sausage rolls and sweet treats, the company is facing a more lukewarm start to 2026, with slowing sales growth and increasing investor skepticism. This comes after a year of robust expansion and a reported dip in profit, raising questions about the sustainability of Greggs’ growth trajectory.
Greggs reported a nine percent fall in underlying profit before tax to £171.9 million for the financial year ending December 2025, despite a seven percent increase in total sales, according to preliminary results. The slowdown is particularly noticeable at the beginning of 2026, with growth in company-managed shops at just 1.6 percent for the first nine weeks of the year – a significant drop from the 6.3 percent year-on-year growth seen previously. This deceleration has not gone unnoticed by investors, with Greggs becoming the most shorted company on the FTSE 250, with short interest rising to 14.38 percent this month.
Expansion Amidst Economic Headwinds
Despite the slowing growth, Greggs remains committed to an ambitious expansion plan. The company intends to open 120 latest stores in 2026, following 121 net openings in 2025. This continued investment in physical locations reflects a confidence in the long-term demand for its products, and a belief that new stores don’t cannibalize sales from existing ones. Greggs maintains that customers increase their overall visits when a new store opens in their area.
This expansion isn’t limited to traditional storefronts. Greggs is diversifying its reach with initiatives like a new bake-at-home range in Tesco and pilot programs for smaller-format “bitesize Greggs” outlets. The company is also responding to consumer trends, exemplified by the launch of an iced matcha latte last year after the drink gained viral popularity. However, some analysts are questioning whether this diversification is a departure from the core appeal that has made Greggs a success.
Investor Concerns and Brand Identity
Robinhood UK analyst Dan Lane expressed concern that Greggs risks diluting its brand identity by attempting to appeal to a broader audience. “Greggs needs to make sure it doesn’t sacrifice its beloved, and reassuringly simple, brand by trying to be all things to all people and losing its purpose,” he said, as reported by City A.M. Lane also cautioned that prioritizing store openings over maintaining like-for-like sales could be a misstep, urging the company to reassure both customers and shareholders.
The increasing level of short selling – betting that the stock price will fall – reflects a growing unease among investors. Shares in the FTSE 250-listed company tumbled more than seven percent in January after the company warned of “challenging” economic conditions. Over the past year, the share price has declined by more than 25 percent, currently standing at 1,558p.
Looking Ahead
Greggs CEO Roisin Currie remains optimistic, stating that easing inflationary pressures should support consumer spending and that demand for convenient food-on-the-move will continue to drive the market. She emphasized the company’s “clear formula for long-term success, leveraging our value leadership, vertical integration, breadth of range and strong track record of innovation.”
The company’s extensive production capabilities – including a facility in Newcastle capable of producing one million sausage rolls daily – and planned new automated sites in Derby (launching in 2026) and Kettering (scheduled for 2027) suggest a continued commitment to meeting anticipated demand. Greggs’ capital expenditure was estimated at £300 million in 2025.
Investors will be closely watching Greggs’ performance in the coming months to see if the company can navigate these challenges and maintain its position as a leading player in the UK’s competitive food-to-go market. The next key update will come with the release of their full first-quarter trading results in April 2026.
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