Greggs to pay £7m to workers after 'exceptional' year boosted by vegan ranges

Bakery chain Greggs is to pay out an employee bonus totalling £7m after a "phenomenal" year during which its sales have been boosted by new vegan ranges.

The payment at the end of January, which will see thousands of workers each receive £300, was announced as the company's latest trading update saw it upgrade full-year profit expectations.

However, there was a warning that the company faced "headwinds" in the year ahead from national living wage increases and the rising cost of pork.

Greggs, which has more than 2,000 shops across the UK and employs about 25,000 people, said like-for-like sales in company-managed stores rose by 9.2% in the year to 28 December.

That included an 8.7% upturn in the fourth quarter, described by chief executive Roger Whiteside as a "strong finish to what has been an exceptional year".

The figures mean full-year underlying pre-tax profits, due to be reported in March, are set to be "slightly higher than previous expectations", Greggs said.

Shares rose by 5% in early trading but later turned 2% lower as investors took stock of its outlook for the year ahead.

They closed the day 1.3% higher.

Greggs has already shared some of the fruits of its success with shareholders, who were rewarded with a £35m special dividend in October.

Mr Whiteside said: "I am delighted to announce that we will also be making a special additional payment to all of our colleagues across the business who have worked so hard to deliver this success in what has been a phenomenal year."

But there was also a note of caution as the chief executive added: "Looking to the year ahead, we face strong sales comparatives and cost inflation headwinds present a challenge."

The employee payment will see about 19,000 workers who have been with the company since before 31 March last year receive £300 each.

Other staff will receive £75 per quarter-year they have been with Greggs.

The company said during 2019 it had been buoyed by strong demand for its traditional ranges as well as the "huge popularity" of its vegan-friendly sausage roll launched a year ago.

More recently it has added a "vegan steak bake" to its menu as well as its first vegan doughnut.

Greggs said: "In the year ahead we will continue to evolve our range to suit a broad variety of dietary choices."