London’s property market has become so over-priced that Greggs, the ubiquitous UK bakery chain famed for its no-nonsense sausage rolls and pies, can no longer afford to open new shops in the center of the city.
On Greggs’ earnings call today, CEO Roger Whiteside said Greggs was being forced out of the city, according to The Evening Standard:
The food chain has only a handful of stores in central London but chief executive Roger Whiteside said he would not open new sites at any cost.
He said: “London’s going strong but we’ve still got a problem in zones 1 and 2 because we simply can’t afford those rents and keep our prices low. I can’t see that changing anytime soon.”
Zones 1 and 2 are in the center of the city, where the wealthiest people live. But you wouldn’t expect to find Greggs here anyway — its image is very, very down market.
The chain usually opens shops in poor neighbourhoods. YouGov has a social survey database that claims Greggs’ customers are likely to have less than £125 a week spare, and probably work in a factory or the social services. They’re “moody”, “accident-prone”, and “stroppy,” according to the polling company.
Reporting on an awful, wide-spread child abuse scandal in working class Rotherham, The Guardian — rather unfairly — used the presence of Greggs to illustrate just how bad the town is, writing: “Rotherham has the unmistakable look of a depressed English town: a Bright Box, a Gregg’s every 50ft, every second shop a charity shop.”
And Google once had to apologies to Greggs for showing a vandalised version of its logo in image search results that showed the chain’s brand as “Providing s— to scum for over 70 years.”
But on the plus side, Jake Gyllenhall eats there.
Lunch snobs prefer Pret a Manger. (YouGov customer profile: Female who lives in London, has £1,000 a week to spend, and works in advertising. Her personality is “control-freaky,” “self-absorbed” and “arrogant”.)
Still, Greggs is making tons of money whether or not it can afford to open up in central London. Sales in the first six months of 2015 rose 6.4% to £398 million ($US623 million); pre-tax profits went up £6.2 million ($US9.7 million) to £25.6 million ($US40 million).
As this slide from the Greggs Investor Relations team says …
… we have so many.