Saw a Substack report on Greggs PLC today that I thought was particularly good. Here are some extracts:

“I would contribute much of Greggs’ success to the following 3 points.

1. An Unusual Culture

Culture is often underappreciated by investors, probably because it is not quantifiable. Everyone now understands that Costco’s culture of customer obsession and staff loyalty has had profound effects on the strength and value of Costco’s business. But that insight was not always obvious.
I think Greggs shares some of Costco’s cultural DNA. From staff profit-sharing to a relentless focus on affordable quality and customer service, Greggs has a culture that is built to last.

2. Excellent Marketing and Cultural Position

Greggs has embedded itself into British life in a way few brands ever manage. The shift in customer perception of Greggs as a bakery to a ‘food-to-go’ shop would not have been possible without excellent marketing and a precise understanding of the target consumer. Tongue-in-cheek marketing campaigns and playful collaborations have created a unique brand identity that resonates across the UK. I find it hard to imagine this branding resonating abroad given the uniquely British aspects of their marketing, thankfully management has no plans to expand overseas any time soon.

3. Entrepreneurial Management

Greggs’ management has demonstrated their ability to adapt to structural shifts in consumer behaviour. They successfully capitalised on the rise of food-to-go and it would be unwise to assume they won’t adapt to future shifts in behaviour. Today, they are experimenting with new smaller store formats, introducing kiosks, and continually trialling new menu options. The willingness to trial ideas and engage in value discovery gives the firm a valuable competitive edge. Importantly, management have historically been disciplined capital allocators. New stores have a high(ish) 25% hurdle rate, which is commensurate with Greggs’ high returns on capital. While this does not remove the risk of over-expansion, it does illustrate that management are confident in their plans.”

Link to full report here:

open.substack.com - Greggs plc grgl