Living wage will put up pasty and sausage roll prices, warns Greggs

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Baker Greggs has warned the new national living wage will put pressure on the group to raise the prices of its pasties and sausage rolls.

Greggs currently pays its shop staff £7.11 an hour, however Chancellor George Osborne said in his July Budget the UK’s hourly minimum wage from April next year will lift to £7.20 for over 25s, from its current level of £6.50, and to at least £9 an hour by 2020.

The company, best known for its sausage rolls, said it was seeing lower costs in the business and “a stronger consumer environment”. 

But it warned that the national living wage, which comes in next year, would lead to higher costs.

Roger Whiteside, chief executive of Greggs, said: “Wage rises will increase inflationary pressure in the business. It is not our intention to raise prices. But ultimately we will see how the market goes.”

However the Newcastle upon Tyne-based chain, which runs 1,668 outlets, said it was not planning price hikes, but did issue caution over the impact of a higher wage bill on the business.

A push into healthier food and store refurbishments helped the fim increase sales in its third-quarter.

Its same store sales rose 4.9% — ahead of expectations — and puts the total increase in sales for the year-to-date at 5.1%, compared with 3.4% at this time last year.

“Market conditions remain favourable with low cost pressures and a stronger consumer environment.

“We expect this to continue through to the end of the year after which increases to wage rates will drive greater inflationary pressure. 

“Our standard rate for hourly paid shop staff is already above the National Minimum Wage and we will maintain a competitive position in the market,” the company said.

Greggs is spending around £13 million on a new distribution depot at its Enfield bakery in north London, which it says will help to expand its distribution in the South-East.

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October 6, 2015 |
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