This article is more than 1 year old

This article is more than 1 year old

Greggs had a milestone year in 2018 with sales exceeding £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-year in 2018 to £1.03bn, compared with £960m in the previous year.

Greggs has bucked the high street malaise in recent months, with strong demand for its breakfast ranges as well as its steak bakes and sausage rolls. It scored a marketing victory in January when it launched its vegan sausage roll. The Quorn-filled pastry attracted a large social media following and shops rapidly sold out.

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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, bolstered by the popularity of the vegan sausage roll after Greggs sold hundreds of thousands of them in the first week.

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.

Roger Whiteside, Greggs’ chief executive, said the roll, which is now in every store in the UK, has made it into the chain’s top five bestselling products.

“We’ve got off to a flying start this year with the launch of the vegan sausage roll generating very strong publicity,” he said. “It is the fastest-selling new product launch we’ve seen since I’ve been chief executive.”

Despite the vegan sausage roll effect at the start of 2019, Greggs warned of potential turbulence from Brexit. The company is stockpiling those materials which have a longer shelf life to cover several weeks of production if a no-deal Brexit disrupts imports.

However, Whiteside warned it would be harder to secure supplies of fresh ingredients, and said Greggs was examining what alternative products it could offer to customers if there were shortages of ingredients such as lettuce and tomatoes. If tariffs were imposed, that could also lead to price rises, he said.

Pre-tax profits rose by 15% to £82.6m in 2018 and Greggs said it expected 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.

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Greggs also reorganised its manufacturing operations during 2018 in an attempt 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.

Trials of “click and collect” at some stores will be extended to lunchtimes. Whiteside also said Greggs was developing more hot meal options, including pasta, goujons, potato wedges and soups, amid talks with Deliveroo and Uber about meal delivery, which could enable it to sell evening meals, a potential new revenue stream.