It was not an easy time for the baker’s shareholders Greggs (LSE: GRG). I bought Greggs shares in hopes of a turnaround in the company, but while I remain optimistic about the long-term prospects, I’m starting to have a bad feeling about where things are headed this year.

Greggs has lost value, although the yield is attractive

Take the past 12 months as an example.

Greggs’ share price fell 14%. So someone who invested £10,000 12 months ago would now suffer a paper loss of around £1,365.

Paper loss is just that. It can disappear if the stock price recovers before the shareholder sells his stake.

However, it can be uncomfortable to buy a stock thinking it’s a bargain and then watch it constantly appear in red ink on your portfolio statement!

There is also an opportunity cost. The money used for the stock that fell could have instead been used for the stock that rose during that period. Of course, hindsight is a wonderful thing!

However, it’s not all bad news. There is a 4.5% dividend yield that I find attractive.

The rise in the share price a year ago means that someone investing at that time would receive a slightly lower return, but the £10,000 should still earn around £400 a year in dividends.

Events test my optimism

I think that on a fundamental level, Greggs is a very good company.

It has a simple but effective and proven working formula. It operates in a market where demand is fairly elastic, and its focus on cost gives it a strong point of differentiation from some competitors.

But things have changed, which threatens that investment status.

To begin with, the demand for adequate and affordable food may not be as elastic as assumed: appetite-suppressing drugs pose a risk.

Then there is Greggs’ cost base. The large number of employees means that rising National Insurance and wage costs have impacted profits.

I see that as a constant risk. But I’m also concerned about what rising energy costs might mean for the company’s bottom line, at least in the short to medium term.

With several thousand shops using furnaces and other power-hungry equipment, Greggs’ already huge electricity bills could skyrocket.

Take the long-term approach

Such risks mean Greggs shares could face a bumpy road.

However, this is where I believe a long-term approach to investing can prove its value.

These risks are real and I believe they could hurt Greggs’ share price for the foreseeable future. However, even though my money is tied up in Greggs stock, at least I’m getting solid dividends while I own it.

The fundamental investment case still looks attractive to me and over time I hope the share price will rise again to reflect that.

So, taking the long-term approach, I plan to simply hold on to my shares and continue collecting any dividends the company pays along the way.