Greggs (LSE: GRG) shares have been one of the strongest performers on the FTSE 250 over the last decade. Shareholders will also be happy to see that the stock has climbed a further 10% this year.

That beats the FTSE 250, which is up 6.2%. It has also outperformed the index over a five-year and 10-year period, rising 29.6% and 451.4% compared to 7.7% and 30.9%.

But with its share price rising, where does this leave potential investors? Is there room for more growth? Or has the ship sailed? Let’s explore.

Challenges ahead?

When I look at Greggs, I see a few issues that may hinder the firm’s growth.

Firstly, while the sausage roll maker has become incredibly popular with its smart marketing over the last few years, I can’t help but feel like it’s swimming against the tide when it comes to long-term eating habits.

In recent years, there’s been a large push to promote healthier eating. People are more conscious about what they’re putting in their bodies than ever before and the ultra-processed menu offered by Greggs doesn’t align with a healthy lifestyle.

Secondly, the stock looks expensive. It trades on 20.7 times earnings. That’s above the FTSE 250 average of around 12. While that’s forecast to fall to 18.6 times for 2026, that still looks overpriced to me.

A resilient business

But then again, Greggs is resilient. It has faced challenges before and overcome them. What’s to say it can’t keep delivering?

For example, sales last year rose 19% to £1.8bn despite a cost-of-living crisis. A trading update in May showed that the business had kept up this form in 2024, with like-for-like sales up 7.4%. As the business put it itself, it’s currently operating in “challenging conditions”. Nevertheless, it seems to be coping just fine.

Looking ahead, Greggs has no plans to slow down either. It opened 64 new stores during the first 19 weeks of the year. That takes its total to 2,500. There’s the argument to be made that when budgets are tight, consumers will revert to Greggs cheap and cheerful goods.

There’s also its tasty 2.2% dividend yield to take into consideration. That’s below the FTSE 250 average (3.2%). Nevertheless, its payout has been steadily rising, which is always encouraging to see. Over the last decade, the company has increased its dividend by 11% a year on average.

Time to buy?

But even after weighing it up, Greggs isn’t a stock I’ll be buying today. We’ve seen the company rise from humbling beginnings to a British stalwart. While that’s inspiring, the stock looks a tad too expensive for my liking.

I’m also concerned about evolving social trends. It’s proved its resilience. However, in the years and decades to come, I think we could see a major shift in consumer habits.

The FTSE 250 is home to plenty of exciting businesses. So, I’ll remain on the search for my next buy. I’ve got a few exciting companies on my radar that I’ll be exploring in the weeks to come.