Greggs sets its sights on more expansion

​​​Ambitious UK growth targets

​Greggs, the beloved UK bakery chain, has set its sights on an ambitious expansion plan to rapidly grow its national presence. The company, which will publish its full-year results on Tuesday 5 March, aims to reach just over 2,900 stores across the UK by 2026, an increase of around 150 net new locations per year since 2022. Looking even further ahead, management believes the company can eventually operate significantly more than 3,000 UK stores.

​Greggs faces competition from big global names

​However, Greggs' bold growth strategy will inevitably bring it into more direct competition with global food and beverage giants like McDonald's and Starbucks. As the bakery chain ventures further into the casual dining space, it will increasingly find itself vying for the same customer base as these well-established multinational brands.

​Market share rising as store formats evolve

​Despite the looming competitive challenges, Greggs has already made impressive strides in capturing market share within the fragmented £25 billion UK food-to-go market.

​To support its expansion ambitions, Greggs is adapting its traditional store formats. The company is opening larger locations with dedicated seating areas, catering to evolving consumer preferences. It is also investing in delivery and drive-through capabilities, although this space is intensely competitive.

​Greggs has identified central London as an area ripe for growth. The company sees an opportunity to extend operating hours to capture more trade in this key market.

​Franchising growth

​A key pillar of Greggs' expansion strategy involves rapidly growing its franchised store base. The goal is to have over 600 franchised locations by 2026, accounting for roughly 20% of the company's total footprint, up from 503 franchised stores as of December 2022.

​Greggs is actively pursuing partnerships to open franchise locations in travel hubs like rail stations and airports as well as fuel station forecourts. A recent deal with SSP, which has a strong presence in rail stations and motorway service stations, is a good example of this move.

​Analyst ratings for Greggs

​LSEG (formerly known as Refinitiv) data shows a consensus analyst rating of ‘buy’ for Greggs with 3 strong buy, 6 buy and 3 hold – and a mean of estimates suggesting a long-term price target of 3,226p pence for the share, roughly 18% higher than the current price (as of 4 March 2024).