Why Greggs has upped meal deal prices again and why the Iran war could increase costs further

Meal deals at Greggs have gone up in price again - with the bakery chain warning prices could rise further if the Iran war continues to increase business costs.

The company is expecting costs to rise by around three per cent in 2026 - although it has taken steps to mitigate the impact by securing fixed-price energy and fuel deals and purchase agreements for food and packaging.

However, it has warned that a “prolonged” conflict in the Middle East means Greggs, and other food retailers, “will likely see higher overall cost inflation through the end of 2026 and into 2027”.

The chain, which runs 2,759 shops including many across the West Midlands including a new store in Dudley Street, Wolverhampton, has already hiked the price of its two-part breakfast deal, incorporating a roll and a drink, from £3.15 to £3.25. It had been just £2.95 prior to October.

Its core lunch deal has increased to £4.25, and its ‘big deal’ which includes a main, side and a drink, has risen to £5.25 - having started out at £5 when it was introduced last September.

Roisin Currie, chief executive of Greggs, said of speculation that prices may go up further: “We don’t see it in the coming months but we do see towards the end of the year and into next year, as the conflict goes on, then there will be an inflationary increase on our costs.

“Where significant inflation comes through to any businesses then that does get passed through at some point to the customer.

“We work really hard to protect our customers and make sure that we offer great value.”

Greggs revealed its sales increased in recent months after a slowdown in growth for the business at the start of the year.

New menu items like the chicken roll – an alternative to the staple sausage roll – and a range of matcha drinks have been proving popular, appealing to new and younger customers.

Greggs has also been adding healthier items to its menu to cater to growing demand for nutritious and protein-rich foods including salads, with a new chicken Caesar salad launching last week.

Susannah Streeter, chief investment strategist at Wealth Club, said: “Greggs has served up a more appetising set of numbers, turning patchy sales into a well-baked performance. Like-for-like sales rose 3.3 per cent in the last 10 weeks, as healthier additions to the menu, like chicken rolls and salads, proved appealing.

“It’s no longer relying solely on sweet treats and sausage rolls to lure in customers but is serving up dishes for a more health-conscious crowd. There have been worries that the popularity of obesity drugs would become a longer-term problem for Greggs, but it has a track record of being nimble with menu choices to meet changing tastes, and it’s delivered once again.

“However, given the heat needed for its in-store ovens, it will be far from immune to the surge in energy costs. Although cost inflation is expected to be a manageable three per cent this year, which has reassured investors, it’s still cautious about what could lie ahead if the conflict continues for much longer. Nevertheless, the steadier pace of sales growth has reassured investors, with shares rising nicely in early trade.”

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, added: “Greggs served up a tasty trading update, with sales growth accelerating in the second quarter as customers tucked into more of its freshly baked goods.

“Continued menu tweaks and improvements have drawn existing customers back, and the addition of new salads and iced coffees to the lunchtime menu is helping the group appeal to a new and younger customer base.

“Partnerships with franchisees and grocery retailers are progressing well, helping sales growth outpace last year’s rates. Alongside tight cost controls and a soft comparable period, profit growth so far this year has been ‘good’.

“Looking ahead, the cost picture is still looking better than it has for some time, despite the Middle East conflict bringing additional pressures.

“Having been proactive and locking in prices for around 85 per cent of its energy needs, Greggs expects cost inflation to only run at about three per cent this year.

“The group’s still targeting around 120 net new store openings this year too, after a slow start, which has seen only 20 net new openings so far.

“All in, the improving sales performance against a difficult trading backdrop shouldn’t be overlooked.

“And with costs still in check, management reiterated all full-year guidance, pointing to profits landing around last year’s levels, which now looks a touch conservative to us if recent momentum continues.”