Greggs has come a long way since it was founded 80 years ago, when John Gregg started delivering fresh eggs and yeast to Newcastle families by pushbike.
Ten years later he opened his first shop, Greggs of Gosforth. Today, the chain boasts an amazing 2,559 outlets across the UK, and is aiming for 3,000.
Southern snobs and foodies used to sneer at Greggs but that changed overnight when in a stroke of marketing genius, Greggs unleashed the vegan sausage roll.
Instead of laughing at Greggs, suddenly everyone was in on the joke.
Nobody was laughing more than Greggs shareholders.
In the decade before Labour’s Budget, the Greggs share price climbed a staggering 406% to peak at £31.90, making it one of the most popular stocks on the FTSE 250.
The company was briefly valued at a tasty £3billion. Now investors have lost their appetite for Greggs, and Labour is largely to blame.
In her Budget on October 30, Reeves attacked British businesses on three fronts.
First, she hiked employers National Insurance contributions from 13.8% to 15%. Then she doubled down by cutting the salary threshold for employer NI from £9,100 a year to £5,000.
Finally, she turned a double whammy into a triple one, by hiking the minimum wage by an inflation-busting 6.7% to £12.21 an hour.
Actually, there’s a fourth as business rates will climb too.
This is a disaster for Greggs, because those all those outlets require a huge army of staff, more than 30,000 in total.
Many businesses will respond by cutting jobs but Greggs can’t replace its staff with AI robots, at least not yet.
So it faces a choice. Either take a hit to profit margins, or pass the cost to customers in the shape of higher prices.
Reeves has left it with little choice.
She’s hammered a whole heap of businesses – led by the UK’s most popular grocery chain Tesco, which employs around 350,000, and Sainsbury’s, which employs 175,000.
Employers are already warning that this will send prices rocketing and drive inflation back up.
Sportswear and trainer chain JD Sports – another big employer – said today that Labour’s Budget raid will be “too much to bear” for Britain’s businesses
I’m not criticising Labour for hiking the minimum wage. Greggs can stomach that. But piling on £25billion worth of NI onto employers at the same time has given it an awful lot to swallow.
Reeves will drive up shop prices, inflation and keep interest rates high. She is already destroying jobs at a time when Labour is trying to get people off benefits and back to work.
The Budget isn’t the only reason Greggs shares have gone from red hot to ice cold. On October 1 the board revealed that sales growth had started to slow.
Now Labour has given Greggs something else to worry about.
Stock analysts at Deutsche Bank are urging investors to sell Greggs shares as a direct result of the Budget, saying the damage was even worse than expected.
Greggs is a brilliant business that gave millions of cash-strapped Brits an affordable treat during the cost-of-living crisis. Now Labour has taken a big bite out of its business model.
We can see the impact across the entire UK stock market, with Reeves wiping billions off company values at a stroke. No wonder the FTSE 100 has been sliding since Labour took power.
Thanks to Reeves, British businesses are closing at a record rate. Greggs won’t close but the Budget still leaves a nasty taste in the mouth.
