Greggs: Capital Cycle Inflection and the Path to Margin Recovery

Ben Beneche of Tourbillon Partners presented his in-depth investment thesis on Greggs plc (UK: GRG) at Best Ideas 2026.

Thesis summary:

Ben outlines the thesis for Greggs, a UK-based food-to-go retailer with a vertically integrated business model comprising manufacturing, logistics, and a network of over 2,650 stores. Unlike peers, Greggs owns its supply chain and manages approximately 78% of its outlets directly, a structure that drives a distinct margin profile and a lower cost-to-serve. This vertical integration underpins a symbiotic loop where scale efficiencies allow for lower prices, reinforcing its position as the UK’s leading brand for value. Ben notes that despite a fragmented market growing largely in line with GDP, Greggs has consistently gained share from pubs and service-led restaurants through store expansion and a superior value proposition.

The company recently faced a convergence of headwinds, including UK stagflation, cost inflation in food and wages, and a period of elevated capital expenditures focused on supply chain capacity. Consequently, EBIT margins compressed from a peak of over 12% in 2021 to consensus estimates of 8.7% for FY25. However, Ben argues the business is approaching an inflection point as the heavy investment phase in logistics and manufacturing concludes. With input costs such as pork and energy moderating, and the supply chain investments laying the foundation for future capacity without proportional cost increases, margins are poised to revert toward historical levels.

Growth optionality remains robust through multiple channels. Management targets an expansion to 3,500 stores, a goal Ben supports via regional density analysis and strong underlying ROIC, which remains approximately 25% for new cohorts. Beyond physical footprint expansion, the B2B segment—comprising franchise fees and wholesale partnerships with retailers like Tesco—offers a high-margin growth avenue, currently generating mid-20s EBIT margins. Additionally, the evening trade, representing just over 9% of company-managed sales, provides high contribution margin optionality as the company leverages existing fixed costs to capture incremental volume after 4 PM.

As the capital intensity of the supply chain buildout subsides, FCF generation is expected to accelerate, potentially reaching £200 million by FY27. This shift from cash consumption to generation should allow the conservatively financed company—which holds minimal term debt—to enhance shareholder returns. While Greggs has historically prioritized dividends and employee profit sharing, Ben suggests the improving FCF profile creates capacity for share buybacks, particularly given the disconnect between the company’s intrinsic value and its current market price.

The shares recently traded at approximately 11-12x trailing earnings with a dividend yield approaching 5%, marking the lowest valuation multiple seen since 2014. Ben calculates an owner earnings yield of 8.5% for FY26, suggesting a mid-teens IRR is achievable through earnings growth and dividends alone, without relying on a rerating. With the stock down roughly 50% from its 2022 highs due to temporary macro and investment cycle pressures, the current price offers a compelling entry point for a durable franchise with pricing power and a clear path to margin recovery.

The full session is available exclusively to members of MOI Global.

Members, log in below to access the full session.

Not a member?

Thank you for your interest.  Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:

First name:

Last name:

Email address:

City / state / country:

Company:

How did you hear about MOI Global? Select Member referral Staff This website Media / Internet Other

If referral, please provide member's name:

Which of the following applies most closely to you? Select Investment Firm - Head Investment Firm - Analyst or PM Institutional Allocator - Firm C-Level Executive Institutional Allocator - Firm Employee Family Office - Head or Co-Owner Family Office - Employee Non-Investment Firm - C-Level Executive Non-Investment Firm - Employee Other

How do you hope to add value to the community?

Leave this field empty if you're human:

About the instructor:

Ben Beneche is Co-Founder and Portfolio Manager of Tourbillon Partners, responsible for c. $200million of assets under management. The Tourbillon strategy is a global, unconstrained portfolio investing in durable companies in public markets. Previously, Ben was Senior Portfolio Manager and Co-Lead of international equites at Pictet Asset Management. He began his career in 2008 as an analyst focused on US equities and the energy sector. Ben has a degree in Economics and Economic History from York University (1st class honors) and is a CFA charterholder. He bought his first stock when he was 16 and hasn’t looked back.