Britain's popular baker and fast food chain Greggs said on Tuesday the surging cost of raw materials, energy and staff wages would limit any material profit growth in 2022 after it reported record annual profit in 2021.
Greggs, known for its sausage rolls, steak bakes, vegan snacks and sweet treats, said costs were rising more significantly than it had expected.
"As ever, we will work to mitigate the impact of this on customers. However, given this dynamic, we do not currently expect material profit progression in the year ahead," CEO Roger Whiteside said.
Greggs made a pretax profit of £145.6 million ($191 million) in the year to 1 January, versus a COVID-hit loss of £13.7 million in 2020.
Total sales were £1.23 billion, up 5.3% on 2019, before the pandemic impact was felt.
The group said it started 2022 well, helped by the easing of pandemic restrictions, with like-for-like sales in company-managed shops up 3.7% compared to the 2020 level.
Despite the near-term pressures, Whiteside said, "We continue to believe that the opportunities for Greggs have never been more exciting."
The company opened a net 103 new shops in the year, taking the total to 2,181 as of 1 January. It sees potential for at least 3,000.
As well as growing its shop estate, Greggs plans to extend evening trading to 500 shops in 2022 and expand a delivery service in partnership with Just Eat from 1,000 to 1,300 outlets.
Greggs is paying a total ordinary dividend of 57 pence a share plus a special dividend of 40 pence a share. Nothing was paid in the previous year. It is also sharing £16.6 million with employees through a profit-sharing scheme.
Whiteside is retiring in May after eight years at the helm and will be succeeded by retail director Roisin Currie.
Shares in Greggs closed Monday at 2,283 pence, valuing the business at £2.4 billion.