Greggs had a milestone year in 2018 with sales topping £1bn for the first time, while the launch of its vegan sausage roll provided a strong start to 2019.
The UK’s largest bakery chain said total sales rose by 7.2% year-on in 2018 to £1.03bn, compared to £960m in the previous year.
Greggs has bucked the trend of a struggling high street in recent months, with strong demand for its breakfast ranges as well as its steak bakes and sausage rolls. It scored a major marketing victory in January when it launched its vegan sausage roll. The alternative to the traditional meat pastry attracted a large social media following and shops rapidly sold out of the Quorn-filled snack.
The retailer said it had enjoyed a “very strong start to the year”, with like-for-like sales – stripping out those at shops open for less than a year – jumping 9.6% in the first seven weeks of 2019, boosted by the popularity of the vegan sausage roll after Greggs sold hundreds of thousands of them in the first week alone.
Shares in the Newcastle-based company have surged to record highs during 2019 on the back of the publicity. At £18.05 on Thursday morning, shares remain about 14% above the start of the year.
Ian Durant, the company’s chairman, said: “The extraordinary level of social and general media coverage that followed [the launch of the vegan roll] has attracted additional visits to our shops, offering a great opportunity to showcase the many improvements that have been made to our shops and product offering in recent years.”
Pre-tax profits rose by 15% to £82.6m in 2018 and Greggs said it expects to pay shareholders a special dividend in July.
Like-for-like sales at the shops Greggs manages grew by a more modest 2.9% in 2018, before the new year launch of the vegan sausage roll, compared to 3.7% growth in 2017.
The sales rise came despite difficulties with unseasonable weather, including the “beast from the east” storms a year ago, followed by the heatwave in June and July that weighed on the demand for baked goods.
Greggs also reorganised its manufacturing operations during 2018 in a bid to better supply its growing network: store numbers increased by 99 during 2018 to reach 1,953 across the UK. Greggs has also increased options at different times of the day, including offering more breakfast options and hot food later on.
Despite the vegan sausage roll effect at the start of 2019, Greggs warned of potential turbulence ahead. Durant warned shareholders of “unprecedented political and economic uncertainty for the food industry and for the UK” as the planned date of the departure from the EU approaches.
He said: “While we cannot be immune to the impact that this uncertainty may have on the economy as a whole, we are in a strong financial position and are investing for further growth and increased competitiveness in the years ahead.”