The opportunity to grow in the U.K. may be limited but it is not insignificant. In the food to go market, the customer makes a decision to grab some food minutes before they choose. If there is a Greggs nearby they can pick up that business. If not the customer goes elsewhere. They are not going to travel long distances to spend £4 on lunch.

In that FT article they provide the example of Newcastle, their home town having where there is one branch per 15,000 people, compared with a UK average of one per 27,000 nationally. Maybe they don’t get to a nationwide average of 27,000 but maybe they can do 20,000.

In one of their presentations they talk about the impact on sales when they close a shop and open a larger shop nearby. When they create capacity for the full product line sales go up a lot.

They also seem to be able to open and close shops easily. Testing locations and maximising the offerings.

They seem to know what they are doing on the property side and are very good at it.

Let’s see what happens over the next three years as they inch closer to saturation and how that affects their capital allocation. They have the 50% payout currently and I believe have done special dividends in the past when the cash builds up. The completion of the central food processing investment will have been substantial and let’s see how that freeing up of cashflow is allocated.

One other random thing I never really thought of before until it was pointed out to me is that the food is hot. Lots of their competitors supermarkets selling lunch deals, which are cold sandwiches. Nothing wrong with that but hot food is another advantage in the lunchtime food to go market.

I like Greggs as an investment. Seems low risk. But yes needs to be monitored for continued great operational management and capital allocation. It’s not the Coca-Cola company.