Over the long term, I have been a strong believer in the power of the business model at Greggs (LSE: GRG). Yet over the long term, Greggs shares have been a mixed bag.

The share price is up 18% over the past year. But over five years, it has fallen 33%, while the FTSE 250 index of which it is a member has inched up 5%.

Over 10 years, Greggs shares have more than doubled.

So, as a shareholder, ought I to hang on to my Greggs shares in the hope of further price gains? Or could I simply sell up on the back of the strong recent rises?

A strong story, but no longer a cheap one

In fact I have already sold the majority of my Greggs shares in recent months, taking advantage of a rally in profits to bank some profits.

Why? After all, I still believe in the long-term growth story here. A trading update this week reported 8% sales growth in the most recent quarter, with the company continuing to open new shops and benefitting from new menu items like the a steak and stilton cheese pastry.

And yet and yet…

In short, there are two things that concern me about hanging on to my Greggs shares, despite my desire to believe in the growth story.

First is the valuation. At 16 times earnings, I do not think Greggs shares are the bargain they were. Having risen by a third in less than three months, that is no surprise.

Not a smooth ride for the share

Surprises are, in fact, my second area of concern.

Last summer saw a shock profit warning due to the weather.

This week, the company outlined increased costs expected next year from new distribution centres and closing some current factories. That was not a surprise as it has been well signalled, but it is a dampener on short-to-medium-term profitability.

From higher National Insurance costs to ingredient inflation, there have been plenty of other things in recent years that have popped up and constrained Greggs’ profitability.

In the first half of this year, for example, the pre-tax profit margin was 6.9%. Go back a decade and it was 6%. During that period, though, revenue grew 162%.

So the increase in profit margin seems very modest given the economies of scale one would expect from such revenue growth.

Costs and more costs…

Perhaps that reflects the fact that Greggs remains labour-intensive and prone to external cost factors like higher energy bills.

But I see it as a problem because, each time I think Greggs’ brilliant, proven business model with its large customer base and strong value proposition is about to send the shares soaring, some other cost seems to pop up that keeps a lid on things.

I still feel the business has great potential but have a nagging concern that, even after the impact of additional costs from the switch to new distribution centres, there could be more surprises down the road.

It just seems to be part and parcel of Greggs’ simple-seeming but cost-intensive business model.

For now, I am hanging on to a few shares. But I am looking elsewhere in the market for shares I think offer me more obvious value as an investor.

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Christopher Ruane owns shares in Greggs.