Greggs steams ahead in first quarter thanks to salads and breakfasts

With hot food in its belly, Greggs got off to a strong start of the year with a 5.7% rise in like-for-like sales in spite of the tepid conditions on British high streets.

As the food-on-the-go group continues its investment programme, trading at its own stores rose 3.7% in the first 18 weeks of 2016.

Despite the modest footfall reported elsewhere, this was up from the 2.3% growth reported in the fourth quarter of last year, though down from the break-neck 6% in the same period last year.

Full year growth targets remained unchanged, with management saying input cost inflation had remained low despite increased wage costs.

The Newcastle upon Tyne company completed 55 of the 200 planned shop refits for 2016 and opened 43 new shops and closed 21 as it churns away from the traditional high street to higher-contributing locations.

By 7 May, 1,720 shops were trading, of which 128 are franchises, with new opening focused on food-on-the-go locations, with the period also seeing the first opening in Northern Ireland.

The hot sandwich range and extended breakfast menu were said to have proved particularly popular, while the introduction of a flat white coffee helped to continue double-digit growth in sales of hot drinks.

The fresh fruit offer was extended and management were encouraged by trials of an upgraded range of salads, which are freshly prepared in store and now available nationwide.

Plans announced in March to close three bakeries have progressed, with the smallest site at Sleaford now being closed and the Twickenham bakery expected to close in the fourth quarter of 2016 followed by Edinburgh in the second quarter of 2017.

Analysts at Shore Capital said the trading performance was "very robust indeed against what has been a demonstrably challenging back drop for the majority operating on the UK high street", as proved recently at Next and The Restaurant Group.

"Seating has emerged as an important builder of basket size to our minds, with many folk adding drinks to savouries for example, and from recent store visits we see Greggs becoming increasing capable and confident with sit down locations."

Ahead of interims scheduled for 2 August, broker Canaccord called for Greggs to be moved to the leisure sector from food and drug retailers to reflect its repositioning to a bakery food-on-the-go operator from a high street baker.