What a challenging five years it has been for the band Greggs (LSE:GRG) share price. It reached a record high at the end of 2021 FTSE250 the stock has fallen sharply since then. Meanwhile, the rest of the London Stock Exchange is hitting up-to-date highs. So what went wrong for Greggs and its shareholders?

Greggs is doing great

Greggs the Baker was founded by John Gregg in Newcastle on the Tyne in 1939. After opening the first store in Gosforth in 1951, the bakery chain expanded rapidly. Today, Greggs is one of the UK’s leading takeaway chains, with over 2,600 outlets across the country. For example, although I live in a petite town in Hampshire, there are three Greggs stores in my area.

Greggs sells a wide range of savory foods (including its notable sausage rolls, steak bakes and vegan sausage rolls), as well as sandwiches and balmy and frigid drinks. When traveling around the UK I often prefer the brisk, affordable and fresh food offered at Greggs to more exorbitant competitors. As I’m from the North East myself, I’m delighted to be able to support Geordie.

Greggs shares debuted on the London Stock Exchange in April 1984. At that time, the company had 260 stores and was valued at £15 million. The all-time high share price reached a high of 3,443p on December 31, 2021, with the company being valued at almost £3.5 billion. In 2022, a up-to-date CEO, Roisin Currie, took over and, unfortunately, the situation has deteriorated rapidly since then.

Stocks are falling

At the time of writing, the company’s shares are worth 1,512.5p, valuing the group at just over £1.5 billion. This brings the share price down a shocking 56.1% from its delayed 2021 peak. To be fair, the shares went ex-dividend on Thursday 30 April at a price of 50p per share, which explains today’s 2.9% price decline.

For the record, my family portfolio holds Greggs shares and last July we paid £1,696.7 a year for our share. We currently have a paper loss of 10.9%, but this does not include dividends. As shareholders, we will receive the above dividend of 50 pence per share on May 29. Instead of spending this cash, we will utilize it to buy more Greggs shares. This increases our share in companies as well as our future profits.

When it comes to Greggs’ troubles, four things got out of hand. First, the cost of living crisis continues to raise production costs, forcing them to raise prices. Second, the growing utilize of GLP-1 dietary drugs is slowing their sales. Third, higher employer social security contributions reduce profits. Fourth, in 2025, unfavorable weather conditions were a problem.

Regenerative fun?

To me, Greggs shares look undervalued and unloved today. The company’s shares are trading at 12.7 times final earnings, which provides an earnings yield of almost 7.9%. Thus, their generous dividend yield of almost 4.6% per year is covered by 1.7 times historical earnings.

Of course, FTSE 250 shares may prove to be a value trap rather than a recovery play. However, I see the odds tilting towards the former – especially as the group’s ambitious store expansion continues and if/when sales growth strengthens. That’s why I’m looking forward to the next stock update on May 12!