Greggs‘ (LSE:GRG) shares were once a stock market darling. For years, the well-known high-street sausage roll maker delivered exceptional returns through relentless estate expansion and a loyal British fanbase.
Then, from a peak of around 3,150p in September 2024, everything went wrong, leaving shareholders nursing a stomach-churning 49% loss from the top.
So what on earth happened? And is Greggs getting ready to stage a comeback?
What went wrong?
There are a lot of moving parts behind the downfall of Greggs’ share price. Consumer spending across the UK has been subdued since mid-2024, with food-to-go market visits declining 3.1% in 2025. That’s a punishing headwind for any high street food chain. And the impact has been felt across the sector, including at other businesses like Costa Coffee and Pret A Manger.
For Greggs, the impact has translated into a significant slowdown to low single-digits – quite far below the double-digit rates that shareholders previously got to enjoy.
The cost side of the equation made things considerably worse. Surging Minimum Wage requirements and higher Employers’ National Insurance contributions squeezed margins, while investment in new supply chain infrastructure added further pressure on profitability.
The result? Underlying pre-tax profit fell 9.4% to £171.9m in 2025, triggering multiple profit warnings along the way. Consequently, institutional analysts began downgrading the stock and revising their share price forecasts in the wrong direction.
So with investors getting spooked and sentiment struggling to recover, it’s no wonder Greggs’ shares are still in the doghouse today.
Is the worst over?
There’s no denying that Greggs has been having a tough time of late. Yet there are some early signs that the storm may be passing. The underlying business remains highly cash-generative. And following its latest results, while earnings remain under pressure, growth’s seemingly starting to ramp back up. In fact, compared to the broader food-to-go market, the company’s notably outperforming and taking market share in the process.
In other words, the cyclical downturn could be starting to reverse. And with Greggs’ shares trading at a price-to-earnings ratio of just 13.7, shareholders could soon enjoy a sustained rally if the recent recovery trends continue to build up.
Having said that, Greggs isn’t out of the woods yet. Like-for-like volumes are still under pressure, dividend cash coverage is still stretched, and management continues to expect flat profit growth in 2026.
There’s certainly room for an earnings upgrade as efforts to boost internal efficiencies progress. But without improvement in UK consumer sentiment, even management’s admitted the road ahead will continue to be challenging.
Nevertheless, I remain cautiously optimistic. Greggs currently offers a tasty 4.2% dividend yield at an undemanding valuation for a business that remains fundamentally solid. So for patient long-term investors looking for a promising recovery play, it may be worth keeping a close eye on this one.
