Thanks for the link to that podcast. They raise the issue of competition which was also referred to by Blackswanny.

Argument is that Greggs had a great run, taking share from over priced coffee shops but the supermarkets are now offering very competitively priced meal deals. There are a lot of supermarkets around and that is going to hurt.

However, the Greggs customer offering is superior in my opinion (higher quality, specialist, hot, fresh, innovative). Yes there is competition but Greggs has got the goods and are difficult to compete with and will be around for a very long time.

They also talk about refurbishment costs, in the face of softer sales. Well that’s life, you have to invest in your properties. It’s a normal cost of being relevant and prepared for the long term.

Bottom line for Greggs is the U.K. government has been forced by the bond markets to raise taxes and unfortunately for Greggs, they have been one of the places government has decided to hit pretty hard. That’s life. That combined with concerns around over expansion and now supermarket competition has dramatically suppressed the earnings multiple. Despite the challenges and negative narrative, profits and returns are holding up.

There is also an element of having been so successful at growing the business in all kinds of ways - it just gets harder to keep getting better.

At around 12.5 x 2025 earnings and a 3.6% dividend, the market is probably getting a little too pessimistic, given the very long term sustainability of the business. But it can of course get a lot cheaper, particularly in a market that runs on narratives and less on discounted cash flows. The negative narrative around Greggs is growing and that momentum can continue to grind the share price lower.