Good morning, and thank you for taking the time to join Richard and myself for the Greggs 2024 prelim results presentation. So the agenda today will be in the usual format. I will give you an update on the results we've announced today. I will share with you some of the key highlights, and then Richard will take you through the financial performance before handing back to me for the operational and strategic review. So it is great to be able to stand here and announce another record performance in 2024, despite a very tough and challenging marketplace, driven by a strong execution of our strategic plan. The slide behind me covers all of the key information, but just a few points to note. For the first time, we have delivered sales of over GBP 2 billion.
That was over 11% total sales growth, and that was 5.5% on a like-for-like basis. We also had strong profit delivery of GBP 189.8 million for underlying pre-tax profits, which was growth of 13.2% and also came at an improved margin. And we're pleased to announce a final dividend of GBP 0.50 for 2024, bringing the total ordinary dividend per share to GBP 0.69. Also really important to mention that in line with our profit share scheme, we will be sharing GBP 20.5 million with all of our colleagues who have six months service or more, and that will be in their pay packets at the end of March. But let me quickly just touch on some of the strong strategic progress that we've made. Just a quick overview, and I will go through these in more detail later. So firstly, the Greggs brand is in great shape.
We continue to be rated as the number one food-to-go brand overall, and very importantly, we continue to hold the number one position for value. From an estate perspective, I can once again stand here and say we had another record year of shop openings with 226 new shops opened in 2024, so that continues to be the drumbeat of four shops opened every single week of the year. That gave us net growth of 145 for the year, and very importantly, the new shop pipeline continues to be healthy and delivering very strong returns. Really pleasing to say we continue to make progress with our evening strategy, and I'm pleased to report this day part now represents 9% of company-managed shop sales and continues to be the fastest growing day part.
Delivery, working with our two aggregators, which we've previously told you, Uber Eats and Just Eat, has continued to grow, now sits at 6.7% of company-managed shop sales. The rewards scheme, which we've always talked about every time we set a target, we smash it, continues to deliver for us. That's really important because that delivers frequency of purchase with our customers. Now one in five shop scans come through the app. Then on this chart, we just show you on the left, trying to illustrate the continued progress we're making on evening, on delivery, and on the Greggs app. The axis on the left just shows you the progress we're making with delivery and evening sales, both of which are becoming a bigger part of our overall sales mix.
The blue bar represents our evening growth, and you'll see that we accelerated that from 2022 into 2023 when we were opening more shops in the evening, but really importantly, 2024 is now representing the organic growth in that day part, and that's very similar to the pattern that we saw in the breakfast channel, and I will update you later on our plans to unlock more menu options that we believe will appeal to that evening consumer. The yellow bar shows the step up we've made from 2023 into 2024 on delivery as we rolled out fully with Uber Eats, and we now have over 1,500 shops within the chain that offer delivery across the business.
Then the red dotted line and the axis on the right-hand side demonstrate the continued growth in the progress of transactions that are being scanned to enable customers to unlock their Greggs Rewards loyalty benefits. As I said earlier, that's very encouraging as we know that that delivers frequency of purchase as well as giving us much better customer data. Now, while the 2024 trading backdrop was challenging with the food-to-go market static in volume terms and data points all across the industry indicating low consumer confidence in the economy overall, really importantly, our brand health metrics remain strong and are improving across a range of measures. This slide just shows you how much progress the Greggs brand has made, taking a slightly longer view of the changes over the last three years.
You can see this on the chart on the left, with the blue bars representing our position in 2021 and the yellow bars representing 2024, and on the right of the slide, you can see how we track the impact of our brand activity. Pleasingly, in 2024, we became the number one food-to-go brand for consideration, and actually, from consideration to purchase intent, it is now converting at its highest ever rate at Greggs, and these are extremely important brand metrics for us to stay focused on, especially when the trading backdrop remains challenging, so in summary, we have delivered another strong set of results in 2024 with record sales and record profit. Very importantly, we have made continued progress on our strategic growth drivers, and our brand health remains and continues to strengthen, so let me now pass over to Richard to take you through the financial performance.
Great. Thank you, Roisin, and good morning, everybody. As Roisin says, I'll take you through some of the financial performance and also some of the plans looking forward as we go into what's an important investment phase for the business. So let's start by looking back at 2024. So on slide eight, we've outlined the key numbers from the income and expenditure overview. As Roisin says, we went through GBP 2 billion of sales, so an 11% increase year on year. And you'll see that operating profit and PBT are both up over 13%, so some margin improvement on the year as well. We've broken out this time the net finance charge because I think it's important to just understand the two different sort of components of that.
So we've enjoyed a lot of investment income over the last couple of years on the significant amount of cash that we've carried in the business, which we're now investing into the new sites that will unlock the medium-term growth opportunity. So obviously, that's something that's going to come down in the years ahead. But you can see that in the last year, we received interest income of GBP 8 million, so quite significant. And then on the expense side, you can see the interest charge, which is the imputed charge that comes with the leasehold estate fundamentally. So as we open more shops and as we renew the leases, importantly for older shops as well, we move on to the current interest rate regime. So it's a bit like sort of coming off your old fixed rate on your mortgage.
There's a kind of a renewal effect in there as well. So it is something that will continue to grow, and we should see the finance income come off as well, obviously, as we redeploy the cash. So an important one as we go into the next phase. I think you all know about the exceptional gains. So in 2023, we had a business interruption claim following the pandemic in 2020. And then in 2024, we disposed of a legacy freehold site down in Twickenham in South London, which realized GBP 14 million worth of gain. So that's the overall picture. I think the only other thing just to pull out is in terms of the earnings growth.
You'll see when we come to the tax rate, slightly higher tax rate year on year, but that's just the annualization of the increase in the base rate, which went through in April 2023. Moving on to sales, this is the way we segment sales in the business on slide nine. We have the company-managed shop estate, and then we've got what we call business to business, which is a combination of the wholesale business that we have in the grocery trade with Iceland Foods and the franchise relationships that we have, primarily running Greggs stores in places like petrol forecourts and motorway services. That's the bigger side of the business these days is the franchise element. You can see that that was up 17% in the overall sales mix year on year. Within that, the franchise like-for-like was 7.5%, 7.4%.
We don't usually reveal that, but I think actually it's important to note that actually that's becoming it's 20% of the estate, and it's a sort of like, I guess, a backdraft. And those locations are in sort of areas where we've seen stronger like-for-like than we see in perhaps some of the traditional high streets. That impact is mirrored in our own company-managed estate, where those sites which people typically access by car rather than on foot have been more robust and perform more strongly. And that's mirrored in the year-to-date trading as well, where the franchise estate system sales growth is actually stronger than the company-managed estate. Moving on then to slide 10 and the structure of the P&L.
So in margin terms, what we're seeing here is almost a reversal of what we've had in recent years, where when inflation was very much coming from food, that was putting pressure on gross margin. As we've seen food pressures sort of go perhaps slightly into reverse, we've seen some expansion of the gross margin, and the pressure comes through in the distribution and selling cost line, which is where the wage costs are. And obviously, wages are where the primary inflation has been, and our overall pricing recovers inflation across the breadth of the cost base. Perhaps the other feature just coming through here is in admin expenses, where technology is just becoming a bigger part of the business, and reinvestment in better tech, both in ERP terms in our shops and back offices, is driving a higher cost ratio in the admin area.
But across the business as a whole, our efforts to both offset cost and recover through pricing were successful, and we expanded the profit margin very slightly, as you can see here. At the bottom there, return on capital employed is a key metric for us in terms of managing the business over the long term. As expected, we came off the high point of 2023. And one of the things to note is that we did capitalize the lease of the new Derby site that we're bringing into operation next year. That was capitalized in the autumn of 2024 and goes into capital employed, which you'll see in a few slides' time. Moving on to costs then, the usual chart on slide 11, which gives you the overview of our cost base. So as you'll be aware, the biggest costs we have are people costs and food and packaging.
On the food and packaging side, it was marginally deflationary last year, and we expect probably single-digit sort of input cost inflation on food and packaging in the year ahead. I think that's consistent with some of the news flow you're starting to hear now from the grocery trade as well. And we've got about five months forward cover as we sit here today. So still some uncertainty over the second half and what that will do for overall cost inflation, but certainly a good planning horizon in terms of our own cost recovery. Energy is expected to be very slightly inflationary, but we've got very good fixed cover on energy. We bought forward, particularly on electricity last year, so we very much know what we're in for there. And on the people cost, this is where the bulk of the inflation will come from in the year ahead.
So last year, bundling together both wage, salary, and pensions inflation, it was about 9.5% in that area. We expect about 8% wage inflation looking forward. That includes both the National Living Wage increase, but also the increases to National Insurance, which on their own are about 1% cost inflation for the business. It's about GBP 20 million worth of inflation that comes from the changes to National Insurance, not just the rate, obviously, but the way that the threshold was reduced. And shop occupancy costs continue to be a pretty benign part of the overall cost base. So across the piece, we're expecting about 6% cost inflation is our best estimate for 2025. So in that environment, obviously, making sure we recover that is important, and making sure we stay great value is also important. And I think this is something that we've done well over the last few years.
Typically, Greggs prices are comparable with what you would find in the grocery sector, but at a steep discount to the food-to-go specialists, and that's the sort of balance that we try to tread. We want to be outstanding value when you compare us with somebody else who makes freshly in the shop, but the supermarkets tend to hold off heat to the fire on absolute price, and the chart you can see on the left shows, over the last three years, which is the period obviously when we've seen a lot of price inflation in the market, what's happened to the value ratings of some of the key operators in the food-to-go specialist market, so these are the people who make on site, not the supermarkets. Greggs is the yellow line at the top.
You can see that broadly through that piece, we've maintained our rating in terms of value with consumers, and I could argue slightly improved it over that period. If you then look to the competitors, which are the gray lines, typically they've seen a deterioration in their value rating. Now, typically they're charging more, and therefore, I guess the compounding effect of inflation has made that gap to the Greggs value proposition even more profound. I think we share it because it's sort of, I guess, to some degree, reassurance that although we've had to move prices more than we typically feel comfortable doing, it's been in the context of a market that's behaved rationally, and the result has been that people have actually sort of seen Greggs as being even better value than they saw beforehand.
We should feel confident going into the year that we should be able to continue to both mitigate cost inflation where we can, and we did that very well last year, almost GBP 11 million worth of cost offset, but also carefully moving our prices where we need to to make sure that we recover the cost inflation that we're seeing coming in. Turning then to the investment program. This is the peak of the investment program that we've been talking to you about for a few years now. You can see on slide 13, we've laid out the usual categories of expenditure. You'll see that on the retail side, it's fairly steady in terms of the number of shops that we are opening, the deployment of additional equipment for the new categories that we are seeing growth in, and the refurbishment of the existing estate.
But the big growth is in the supply chain where we've been ramping up the investment in the two big new sites at Derby and Kettering. And this will be the peak year when we're building on both of those sites, as I'll show you in just a second. So we expect capital expenditure around GBP 300 million in the year ahead. And as I've said, a relatively steady investment in both the new shops and the refits. Now, these are the new shops that we add to our estate. On top of that, you then have further openings from franchise partners and then closures, which generally relate to relocation of shops. So this is trying to pull out the CapEx impact of our opening program on Greggs. If we think about that shop program, why are we so confident in opening a lot more shops and building capacity for them?
The answer is we get great returns on our new shops. We've laid out a bit of a chart here which describes the sort of maturity pattern and the pace that we see these come through. Because people often ask us, "Well, what happens when you open new shops?" Here are some examples from the cohorts of shops we've opened over the last three or four years. If you scan to the chart at the top right, you'll see the overall return on investment that we make on the whole estate, which is a handsome sort of 38% ROI, but that's on shops which are very mature and very established. You then see the cohorts of shops and how they mature over time. The most recent cohort that's measurable is 2023, typically sort of starting around that level, just below sort of 15% ROI.
And we need it to get to 25% to meet our investment criteria. And you can see that they get to that point after about broadly two years of opening, and there's a fairly predictable pattern that they go through. You can see the 2022 cohort are almost there, and the 2021 cohort are already north of 30%. So we're very pleased with the profile of those. They continue to give us very good returns. And it's about extending the Greggs reach. These new shops are going into areas where we're underrepresented. So equally, we're happy that the risk of cannibalization on these new shops is really very limited. So we're making strong returns. Typically, as I say, they pay back in two to three years. And at the same time within this, we're also relocating some of our core legacy estate, which we believe has got further potential.
So some of the old high street shops are just kind of outgrowing. The small old bakery shop can't cope with the amount of volume that we're seeing in the new model. So typically, those relocations have above-average returns. And typically, we're sort of super happy to do those because you kind of know what you're getting with a relocation. You've got an established customer base. You know the market. You've got a very experienced shop team, and we just liberate them. In fact, the lady who served you coffee outside is a classic example. She runs the Eastcheap shop in London. And if anybody knows the old Eastcheap shop, it was horrible. I don't mean that horrible, horrible. I mean, it was very cramped and very difficult to operate. She's now got a beautiful wide shop that she operates. And seriously, ask her about it.
She loves that shop because it's liberated her to grow the sales. And that's the story, really, with relocations. So with strong returns on shops, we obviously want the capacity to do more. So on slide 15, you can see the phasing of the investments that we're making and sort of the accompanying narrative. So as I say, the investment in retail and also some of the other back-office stuff we do, which is the yellow bar in IT, is relatively stable. We're doing quite a bit in IT at the moment with reinvesting in our SAP ERP infrastructure, where we're moving to the latest version of that. But the real peak is obviously in the blue bars, which is the supply chain.
So you can see in the last year, we finished and commissioned an additional production line at our big savoury plant in Newcastle upon Tyne, Balliol Park. So we've now got four production lines making our famous bakes and rolls. And we extended two of our distribution centres in Amesbury, in Wiltshire, and in Birmingham, which has given us about 300 shops extra capacity. And we started work at the Derby site last year as well. So our landlord was doing the works up until the autumn, and then we moved inside during the autumn and started to do some of the fit-out. And that's the theme of this year. 2025 is fitting out the Derby site. Roisin will show you a lot more on that in just a moment, which is due to open in 2026.
And then in January, we bought the land for our new Kettering distribution center. So we are now on site and will be building that through this year ahead of our 2027 opening. So you can see how the CapEx comes off significantly next year, and then it steadies out from 2027 into what we would see as a more going level beyond the investment phase. And we've added the red line to this chart, which shows you how capital employed grows through this period. So you can read that against the right-hand chart sort of axis. So you can see it starts from just reading that. It looks like it's about GBP 950 million as we come into this year and rises to just above GBP 1.2 billion as we exit in 2028. And you can see the shape of it.
Obviously, we're investing and redeploying both cash and cash flow into this program in the current phase. And then it starts to steady out as you come through. And obviously, you thought that was perhaps helpful to those of you trying to model the shape of Return on Capital Employed, particularly as we go through this phase. On page 16, we've tried to give more detail again to help you to sort of model the impact of these new sites because we had a lot of questions through the back half of last year about when does the depreciation kick in and what's the impact of opening these sites. So we've tried to give you as much as we can some of the phasing here.
So for the two big sites that are coming on board, we've given you the kind of the investment terms, including for Derby, the shape of the lease that we've entered into over a 25-year period. And then in half years, over the next three years, we've given you an overview of how we expect those projects to run and when we expect them to go live. So just briefly, on Derby, obviously, this is the year where we are fitting out the site, getting all that logistics automation inside, putting in the first production line. But there will be some OpEx that will start to creep in in the second half of the year as we recruit the management team and start to incur some sort of utility costs. Roll into 2026, and we go live in Q2 at Derby.
And therefore, there's obviously a step up there as the depreciation kicks in, business rates, all of those sort of normal site costs, management teams, those sort of things. And then in the second half in Q4, we expect to start to go live with the production element of Derby as well. So again, there's a bit of a depreciation kick there. And that should annualize as you go through 2027. So again, you sort of see the full cost of the additional site kicks in there. Kettering, the second line, runs about a year behind that. So we've only just got the land in Kettering. So this year is about building that shell. And then next year is about the fit-out inside, getting all the logistics operations going, and we'll be commissioning it at the end of next year.
So what you see with Kettering is then the kind of the actual sort of depreciation and other costs kick in really at the start of 2027, and we should be fully live by the end of that year. So we've tried to give a bit of a steer on what that might mean, and hope this is helpful in terms of OpEx. So we think next year, 2026, you'll probably see about a 40 basis points OpEx headwind as we carry cost related to the Derby site step up. And then probably another 40 as that annualizes and we start to get into the Kettering costs in 2027. Now, from 2027, of course, there's a mitigation that starts to kick in because we start to grow into the capacity as well. Because this is a step up in capacity within the business.
We'll be filling shops in our existing capacity through 2025 and 2026. But as we go into 2027, we start to use the new site's capacity. And that's the story then as you exit this and go forward, is that we are opening new shops, but we've already got the supply chain capacity and we've taken the cost already. So it's about the shape. It doesn't change the long-term either potential or profitability or returns in the business. We still think aiming for a 20% ROI is absolutely where this business should be in the medium term. But hopefully, it gives you a bit of help in terms of modeling this forward because we kind of got the feeling that people didn't quite know how to put the pieces together. So hopefully, that's useful. Very happy to sort of talk to you more about that later, as is Dave.
So just to conclude the perhaps less exciting bits on tax EPS and dividend, although hopefully the dividend is at least exciting. We've talked a bit about the tax rates. The only other sort of bit of colour on tax is that the exceptional gain had a relatively low tax rate due to the availability of some capital losses that we were able to offset against that. EPS we've already talked about. And the ordinary dividend, as Roisin said, GBP 0.50 per share, which adds up to a GBP 0.69 ordinary dividend for the year as a whole. And as usual, that's twice covered by earnings, so a 50% payout ratio. And then finally, on the balance sheet, it's one of the features of Greggs that we always maintain, a very strong balance sheet. You can see the strength of the cash inflow.
So GBP 250,000,000 of net cash inflow from operating activities puts us in a very good place for the phase that we're in. As we invested, you saw the net cash position come down to GBP 125 million on the balance sheet at the end of the year, and that will be deployed further in the year ahead, of course. And we've talked about the finance income should start to normalize from this year because of that balance coming down. But in reserve, we also have, just to reassure you on liquidity, a GBP 100 million revolving credit facility, which is available to us to supplement that. And as usual, the capital allocation, our priorities are look after the core business, keep that strong and healthy, keep a strong balance sheet.
We think as a guidance, keeping about 3% of revenue is probably a good way to kind of model what we think is a good net cash position to cope with the working capital needs of the business. Maintain that attractive ordinary dividend, as we've described, and then selectively invest to grow. Clearly, that's the mode we're in at the moment, investing for the growth in the medium term, and then as we get through that phase and the CapEx comes off, wherever there's surplus cash, we would normally return that by way of special dividends, so that's the financials. I'll hand you back to Roisin now, who can add some color on the strategic overview.
Great. Thank you for that, Richard. So let me just touch on the winning growth strategy. So this is a quick reminder of the strategic growth drivers that we've talked about to you for a few years. And we remain very focused as a team on delivering. I will just go into each of these in a few minutes and talk about each of the various strands. But firstly, let me spend a few moments on menu innovation, which sits at the heart of Greggs and will always be key to our success. So our new over-ice drinks range was introduced last year. It is now rolled out in over 1,175 of our shops. So we have options such as the iced latte, the cloudy lemonade, which are proving very popular, and we have more flavors planned over the coming months to excite our customers.
We also launched our ready-to-drink versions of our latte and our caramel latte, and that's really to enable customers to have their coffee wherever and whenever they want, and then we've talked to you before about our made-to-order, hot chicken and fish finger wraps and burgers. They are selling well, and we continue to roll those out. Currently, we already have them in more than 200 shops across the chain. Now, we know that those products work really well, particularly for the evening consumer. However, what is really pleasing is they're proving very popular at lunchtime too, which is great, and what we've done is we've ensured that they are a great value price, so it's GBP 5 for the wrap, for the wedges, and for the drink, so we're replicating what we did really well at breakfast, a great quality product at a value leading price, which is really important.
Then I've mentioned the piece around making sure that we continue to broaden our customer appeal. I've touched on some of the areas mentioned earlier on in the slide deck. However, I think it's really worthy to confirm that we have maintained our number one position for food-to-go breakfast visits. And as I've already said, we continue to work hard with our menu innovation to ensure we have offerings for the food-to-go consumer right across all of the day parts. Now, you'll also be aware that we have a lot of fun at Greggs, and we do some tongue-in-cheek marketing to really engage and excite and enthuse our customers, and hopefully you as well in this room. We did launch the Baked in Gold jewellery last year, and that coincided with London Fashion Week. We also partnered with Fenwick.
I don't know if any of you made it up to the northeast, but we had our Greggs pop-up champagne bar over Christmas. Then at Christmas, who better to launch our Festive Bake with than Nigella Lawson, who epitomizes Christmas? That really enthuses, excites customers. We get a lot of talkability on social media, and we will continue to do plenty of more of that in this year. Please watch this space. It is just interesting to step back and look at the significant strategic changes that we've made to our shop estate over the last 10 years. Back in 2024, as you can see from the chart on the slide, more than 80% of our shops were in what you would describe as high street locations. Since then, we've relocated a lot of those shops to better locations.
We've also found opportunities to open new shops, ensuring that we maintain that strong high street presence, which is really important for our delivery channel and also gives us a strong, diverse shop portfolio, and in total, we have relocated, opened or closed 500 shops on the high street over that time, but really importantly, when you look at the net growth, you can see that that has come from locations where we are underrepresented, and we've talked to you many times about the roadside, the transport hubs, the retail parks, the supermarkets, so when you look at the Greggs estate today, you see a very different balance with these newer locations making up almost half of the estate, and really importantly, as Richard mentioned earlier, these are delivering very strong returns for us.
But there is a lot more growth on the horizon as we continue with the strategy of being more convenient for our customers as they go about their busy lives. I said earlier, we opened more than four shops every week in both 2024 and 2023, and we continue with good momentum in our forward-looking property pipeline with a focus on the locations that I've just mentioned that were underrepresented. We ended 2024 with 2,618 shops, and we continue to be confident in our opportunity to have significantly more than 3,000 shops right across the U.K. But in fact, we're building capacity for up to 3,500 shops. So why are we so confident in the opportunity that lies ahead? Well, the map of the U.K. that you can see behind me is shaded green to show you where we are most densely represented.
The very darkest green shows you where we have shops serving a population of around 15,000 people. And you can see that in Northern England, Central Scotland, and parts of South Wales, we're extremely densely represented in those areas, but we continue to still open, and that's opening in these underrepresented catchments. However, you can clearly see by the very lightly shaded areas just how much opportunity we still have to go after right across the U.K. There are lots of areas across the U.K. where you still cannot access Greggs. And a really good example that we've pulled out and magnified to the right of the chart is the square that represents London. So with over 9 million people in London, you can see just how much opportunity there is for us.
In the year ahead, we aim to open again between 140- 150 net new shops, which again means from a gross number, we will open more than 200 shops this year, including our relocations. However, it's not just new shops that are important to us, and I've said this before. It's also making sure that we take the opportunities to relocate to bigger and better locations and refurbish shops in great locations to ensure that we can provide the consumer with that multi-channel food-to-go offering. Last year, we relocated a record 53 shops, and we're planning for a similar number this year. Richard's mentioned the importance of that. These shops see an average of 30% increase in sales in that first year after opening. We also refurbished 165 shops last year and have a plan to refurbish a similar number this year.
Again, really important because that ensures we improve our ability to serve hot food and meet demand for delivery and digital channels for our customers. Now, onto evening trades. So let me talk about extending our trading hours. Evening continues to be our fastest growing day part. It now represents 9% of company-managed shop sales, so we're making good progress. We know that over 35% of the food-to-go market is after 4:00 P.M., and our hot food items such as the chicken goujons, the pizza slices, and the hot sweet options are very popular, along with the core freshly baked menu. We also launched last year a new barbecue pizza flavor, and as well as our six-slice pizza box, we introduced a four-slice version. Both pizza boxes can be customized to suit different tastes and are great value price to feed all the family.
We have more innovation planned for 2025. Our most recent launch is our Mac and Cheese, which we've just launched across the U.K., and our customers are already telling us it has become a real favorite. Really important, we do lots of quirky marketing, but we also do really simple messaging. Our messaging on evening is simply, we are open late, really making sure that we drive that awareness. Onto our digital channels, which continue to move forward at pace. Delivery offers another channel to be able to access our offer in a way that is convenient for customers. We've got our two delivery partners, we've got Uber Eats, and we've got Just Eat, and we now have 1,556 shops across the U.K. that provide that service to our customers.
Really pleasing, last year that increased by 31% on sales as we meet our ambition to extend the geographical reach right across the U.K., and there's also been continued strong growth in the use of our Greggs app. I said earlier, one in five transactions are now scanned through the Greggs app, and that's increased from just over 12% the year before. It's really important to us because we know that customers that use the app drive more frequency of purchase, and then we can use the behavioral data that we get from the app and our CRM system that then allows us to send you personal messages that are timely and relevant, and we have a very high opt-in rate as a result. That allows us to do things that are tactical, such as driving double stamps to drive evening awareness.
We know that once we get you trying evening awareness, trying evening menu, then actually you continue to do so in the months after the double stamp promotion. Richard mentioned supply chain, really important because we would not be able to deliver our growth plans as a vertically integrated business without growing the capacity of both our supply chains and our systems. Our manufacturing investment that Richard mentioned has already enabled an extra 35% capacity of our iconic bakes and sausage rolls in our savoury plant in Newcastle. Redevelopment of Birmingham and Amesbury gives us logistics capacity for a further 300 shops. Our two new state-of-the-art sites in Derby and Kettering are on track.
So on the top right, you will see a photograph of the Derby site showing just how much progress we've made on that site, our frozen manufacturing logistics site, and it will come in on stream, as Richard said, in 2026. Below it, it's actually an artist's impression, although it looks very similar, but that's the National Distribution Centre for Chilled and Ambient Goods that we're just starting to build in Kettering. And then, as Richard has mentioned, we continue to invest in technology. So that is the SAP, SAP, ERP, S/4HANA. Yep, how many acronyms can you say in one sentence? The ERP system we're putting in, but it's also the digital capability that is so important for us to make sure that we continue to move forward at pace.
And then just to mention the Greggs Pledge, which continues to evolve and becomes more and more important for us. As a business that has set out to make sure we're doing the right thing, we are delighted with the focus and progress we continue to make against our commitments. We've put some highlights in this slide pack for you. So we have worked with the Greggs Foundation. We've met our Breakfast Club target a year early. We now have 1,000 primary schools. Very importantly, we feed 75,000 school children every single school day. We also opened our 38th outlet shop to reduce food waste and also support the local communities. And really proud to say that more than 30% of our range is now in the healthier choice category.
Then the 2040 Net Zero carbon target is fully embedded in our business processes, and we've increased the use of renewable fuels with areas such as biogas and hydrotreated vegetable oil. In summary, like-for-like sales and company-managed shops grew by 1.7% in the first nine weeks of the year. We did have challenging weather conditions in January. Week two, we had snow and ice right across the Pennines. Week four, we had the storm, which meant there was a red weather warning, and we had to shut 250 of our shops across Scotland and Northern Ireland. As I've already said, we have got a strong pipeline of new shop openings as we pursue our ambitious growth plans and invest in the capacity required to realize those ambitions. We are confident that we can manage the inflationary headwinds and deliver another year of progress.
And we've got a strong track record of making sure that we can deliver against those headwinds. And you can see from Richard's slide earlier the value that we deliver to our customers. And we remain very optimistic as we continue to execute our strategic growth plans and realize the opportunities to become a significantly larger multi-channel business. On that point, I will pause there. Richard and I will now move on to Q and A. Richard's going to try and manage those of you that are on the webcast through the questions, and obviously, we will take questions in the room as well. Thank you.
With apologies, I'm going to take a few from the webcast first just to kind of catch up on a few that have come in, and that might. They may answer some of the ones in the room.
If not, we'll cut back to the room straight after, so a few that relate to sales from Chris at Redburn. Just on your last point, Roisin, in terms of the color on how trading's evolved from January into February, I mean, broadly, February was in line with what we saw in Q4, so as Roisin said, you know, January was held back. We've been seeing a broadly similar underlying trade position through in the first part of this year, which was what we had expected. Other sales-related stuff, how does this compare to trading trends in the franchised estate? As I said, the franchised estate continues to trade ahead of the company-managed estate for reasons of location, but also the maturity of that estate. It is a younger estate. It's still in that sort of like early growth phase.
Another one here, have we seen any change in customer behavior in response to recent price increases, Roisin?
No, we haven't. And I have to say we monitor it very carefully, what we see coming through from both customer sentiment, which is why when we talk about continuing to be number one brand for value, it's so important to us. We also monitor the market because we want to make sure that we are the value leader in the food-to-go market. So, looking to see what others do on pricing as well is extremely important to make sure that we continue to have that headroom. I think as we start to have more than one in five of customers scanning through the loyalty app, the great news about that is you start to get data on customer segments.
What we start to be able to do more of this year is actually segment the life cycle of those customers and actually really understand their behavior. You can start to interrogate it as well from a, you know, meal deal type customer to a single purchase customer. We'll continue to do more of that this year. As of yet, we haven't seen any change.
That sort of leads us into a question from Ben online as well about that app and, you know, what happens. We see an increased frequency as people buy into the app. That kind of inevitably matures over time. Then you turn into what we call the CRM phase, which is about trying to mine their data, understand their behavior, and look for further opportunity to market directly to them.
And that's been a theme now where all the campaigns we run, we're actually able to use the customer data that we have to reinforce those campaigns and encourage them to participate in growth areas such as the evening. So, I think that's probably covered the main bits. The only other thing was in terms of asking about, you know, do we expect volume growth to improve or remain challenging? That's a big question, isn't it? We expect it to remain challenging, I think, for about the first half of the year. That's what we said when we came out after Christmas. We said, look, you know, it is a challenging environment for volume at the moment. We think that that's been the case really since the midpoint of last year.
It is possible, you know, with wage increases coming in in April that things do pick up as customers probably getting to the point where their costs have been going up, they're waiting for that wage award. So, I think there are reasons to be optimistic, but we're planning for a kind of conservative first half and then hope that when we annualize on that position, we should see a better second half is our working sort of our working plan. So, we'll turn back to the room. Kate.
Good morning. A couple for me. Kate Calvert from Investec. Two questions for me. First is in terms of the new store pipeline, is there going to be any difference in mix between company-owned stores and franchise, or is it going to be pretty similar to what you've done historically? And the second question is on made-to-order.
You've now got it in 200 shops. How many stores have the sort of space to be able to do that? I mean, could you get it into a similar number to your delivery stores, 1,500 or so? And how fast do you think you might roll that out?
Sure. So, starting with the new shop pipeline, a very similar mix to previously. So, and again, this is about trying to make sure that we take the opportunities in those underrepresented catchments. So, we do a lot of work around the franchise partners ourselves to try and make sure that we get that right balance. But if we look forward over the next three years, and you can usually look forward for your property pipeline for three years because of the length of time it takes the deals to land, we're very confident in a similar mix.
In terms of made-to-order, it's a really good question because I guess the flexibility of Greggs is that we can go into very small units, which don't give you a lot of back space, and we can go into seated operations, and obviously, made-to-order lends itself to having more space behind the scenes. What we're just doing, as you would expect, is the shops that we've rolled out to in the plan for this year are almost the easy picking, so they are the shops that have already got the space. We've got some trials underway just now. We call them our Series 2 shops. They are much tighter spaced shops, so we've got trials going on just now to look at how can you reconfigure the back and still be able to provide that made-to-order operation, whether or not that is successful. We will wait and see.
Part of the reason for rolling out a product such as mac and cheese is because you can put that in the front hot-to-go unit. So, you're always trying to get the balance of giving the customer as broad an offering as possible, but making sure that the top shop team can deliver it efficiently and well. We've got other sort of menu innovations just now in the pipeline, which again lend itself to the made-to-order market, but are simpler for the shop team to deliver, and that'll be part of the series two trials as well.
Hi, morning. Richard Stuber from Deutsche Numis. Could I ask three questions, please? The first one is on pricing. Could you tell me what your sort of strategy is going for this year?
I think you mentioned there may be another sort of modest price increase, maybe sort of later on this year. You just in terms of what you're doing there. The two questions on costs. The first one is, I think you also mentioned the food costs could be between sort of 5%-10% for this year. Now you're talking about sort of mid-single. Is it mid-single digits? Are you moving away a little bit from that top end of the range in terms of food cost inflation? The final question is, I think you mentioned GBP 11 million of cost savings you made this year. Could you just give a bit more color in terms of what they were, what the annualized impact would be going into this year, and what other cost initiatives do you have for this year? Thank you.
Yeah, that sounds like it's my territory, doesn't it? So, we took price increases coming into this year. So, we've basically taken our, you know, the bulk of what we need in terms of cost recovery. So, we're in a good place on pricing. And we did that because essentially our wage increases go through in January. So, we look to offset some of that. So, we will make a sort of what I would call a kind of an adjusting increase at some point this year. Once we've got better visibility of what the sort of second half food and packaging outlook is, we will make some adjustments mid-year, but they will be less material than the moves that we made at the start of the year. And that's not untypical of our behavior to make sure that we get a good recovery.
Food cost inflation, where will it be? That's the question. I mean, I push the procurement team. They're always very conservative and want to beat the numbers they give me. So, I kind of aim off a little bit, which is why I'm saying sort of mid-single digits there, saying 5%- 10%. I'm sort of hoping it'll be better. But, you know, at the end of the day, we don't know, but we've enough flexibility in our response to make sure that we can get a good balance between the two. And as I say, sitting here today, we've got about five months cover, which is a nice place to be as well on that.
So, it's inevitable, I think, that food inflation goes up because you've got, you know, these wage costs are in the supply chain of our, you know, our producers who are processing foods for us. So, inevitably, there's a sort of a circular effect there. And then in terms of the cost savings, well, a lot of it comes from the way that we, it has to be structural the way we measure these cost savings. So, good examples would be the way that we bring ingredients into our production sites, for example, and trying to structurally take out, say, packaging or buy in greater bulk, looking at the flow of goods through the supply chain.
Because with an integrated supply chain, you can look really end to end, literally from the point where you bring ingredients in through manufacturing through to the point where that product arrives in the shop and look for the efficiencies, and that's part of the magic, really, with the integrated model in Greggs, is that, you know, you're not having to kind of cross-trade all these products along the way. You can effectively design the process so that it flows. Some of it can be technology related, so some of the work that we've been doing, particularly in, you know, shops, some of the advances with the tills are fantastic in terms of the speed that a member of staff can operate the till in the shop with the newer tills are just laid out to be faster to use to eliminate some of the downtime for customers.
Those have a duality of benefit because they are lower cost in terms of wages, but they're speeding the queue up as well. So, those are the things we really love. And to your answer, your question about, you know, how does it affect this year? Well, you know, almost half of that is there's a kind of a rollover effect, as we call it, where, you know, as you've kind of obviously sort of put the initiative in place last year, you get some of the benefit rolls into this year. So, there is some rollover, but equally, we incentivize the team to drive for new initiatives as well to make sure that we're constantly trying to offset what we can.
The reality of cost inflation is that it's always going to be a kind of a minority that we can offset, and we do still need to move prices, but it all helps. Andy.
Hi there, Andy Wade from Jefferies. I've got a few questions, but I guess I should probably stick to three. The first one on the investments that we're sort of talking about on the phasing on the OpEx side of things. I guess the question on that one is it sort of seems today like it's new news. I'm sure it isn't new news to you. And you have touched in the past on dilution in ROCE in the medium term before it recovers again. I guess most people had assumed that came from Capital Employed going up rather than necessarily operating margin coming down.
But I guess the question, that's not a question, that's just me talking. The question is, was it that you didn't know that it was going to be 40 basis points and so you didn't tell us before? Was it that you knew it was, but you didn't think it was quite the right time to tell us yet and you were waiting for that? Or the third one is that was it that you sort of expected to offset it a bit? Maybe things have gotten a little bit tougher from pricing or National Insurance or whatever it might be. Just sort of interested in how you got to where you got to and the timings and so on.
It's always been this, and this has always been in our modeling, but we didn't think it was in your modeling.
We were starting to get questions through last year, which was leading us to think, okay, well, have people actually kind of factored in the way this is actually? When you open a new site, there is a step cost. You know, you can't have an extra factory without actually some of that is fixed cost and some of it is variable cost. We started to get the impression that people have perhaps extrapolated this in a more linear way rather than the reality, which is you open a new factory, then you open a new factory, then you've got them and you enjoy the benefit going through as you increase the utilization.
There's no change in certainly our own modeling, no change in the plan at all, but it became, I think, apparent that we probably just need to give a bit more guidance as to how this works in the real world so that we could sort of align the models that you work from. I'd say
And then on the same topic, we're talking about sort of 40 basis points and 40 basis points. So, getting on for sort of 10 percentage points of headwind over two years because they're, if I've understood you right, they're sort of a cumulative one and then incremental. I mean, how quickly would one expect that to build back? I guess that's the question. Is it over another three, four, five years as you begin to utilize those facilities, or could it build back a bit more quickly than that?
Yeah, I mean, you probably need to get back to the point where those factories are sort of 80% utilized, which would be a normal kind of level in a supply chain that's running efficiently. We were running a lot hotter than that a couple of years ago when we were running at sort of 21% ROCE. So, if you work it forward, if we're growing at the current rates, you would expect that somewhere around the sort of 20-30 point, you should be kind of getting back to those sort of levels. It kind of links in with a question I've had online actually from Richard at Barclays, which talks about, you know, well, in the past, we've shared the supply chain OpEx cost.
And for those of you that came to the event we ran in Enfield last year where we talked about this investment programme, we showed the great progress that had been made in lowering that OpEx cost over time. And we're just sort of saying, you know, well, once Derby and Kettering are open, should that OpEx cost return to those sort of levels? And I think in time, yes, it should do because what we said at the time was this was not necessarily a more efficient supply chain than currently. It was the most efficient way of extending the supply chain at a similar cost. So, we should get back to those same sort of levels. And therefore, margins and returns should equally sort of return to sort of the more recent levels over that same time period.
I'm going to leave that question.
Second one on page 14, you gave us the chart of how the stores are performing, sort of new stores versus more mature stores. And I guess somebody could look at that and say, well, is that just a maturity and it will go from step from there to there to there, or is it that your new locations are getting worse? So, I guess the question is, if you looked at new stores historically, how would they compare to the 2023 one and two-year-old stores? How would they compare to the 2022 one?
They're all starting off at that same point. So, they all land when they first opened, the first year after opening, they all land in that same area and therefore are a very predictable path through.
The only other thing we have said, which is still true, is that the character of the shops in the pipeline is that they're slightly stronger returning than the average in the estate. So, you know, there is another benefit of the kind of the change in mix that we're seeing is that it is kind of weighting the estate towards a more profitable location type. And again, we see the same effect when we relocate stores. So, if you look back historically, broadly the same point, but maybe slightly better now in terms of early returns because of the mid-. Not the start point, but where they mature to ultimately.
Okay, thanks. And then final one for me, just because I've been asked it quite a lot of times on cannibalization, are you seeing any cannibalization from opening new stores? You've previously talked about the fact that you don't.
We don't think so. I mean, the locations, if you think about the locations we're opening in, they are so different to the locations we're in. Now, at the end of the day, you have to be in saying that, you have to be slightly careful because at some point, is it possible that basically Greggs, people have got too much access to Greggs. Everywhere they go, they come across one, which is kind of the objective. Does that then start to effectively cannibalize? Not in the way that you can see it geographically, but in just people's behavior. But I don't think there's any sign of that at present.
It's reinforced by Roisin's point about, you know, if we're still opening shops successfully in those heartland areas where we've already got the greatest density and successfully so, then the opportunity, frankly, in predominantly the south of England is enormous.
Yeah, absolutely. Okay, thanks. I'll pass on to someone else.
Sorry, we'll come over this side of the room. We've been neglecting you on this side.
Hey, yeah, morning. Ruben Pathmanathan from Peel Hunt. I just had two. So, the first one was how much of that 7.4% of the franchise like-for-like is pricing and does it make up a higher proportion of like-for-like than the company managed like-for-like is? And the second one is what is driving the average cost per new store down from GBP 410,000 to GBP 400,000?
So, on the pricing side now, it tends to be very similar.
Our franchise partners obviously face the same broad input costs and challenges that we do in terms of recovery. So, typically they're facing a very similar picture on costs. And the cost per refit or per new shop, it's more a factor of the size of shops in the pipeline than anything else. So, although we give you an average, which is kind of helpful for modeling of the CapEx you would put into a new shop or a refit, the reality is it can be a really wide variation. So, at one end, for example, if you have a very big seated shop, that can be quite expensive and could be sort of quite a big premium on the average, particularly if they are in transport locations where typically the contractor costs are higher as well for getting the work done.
The other end, if you're on an industrial estate where it's a relatively sort of easy access job, simple unit that you're refitting, or indeed supermarkets where you've already got the kind of, you're typically putting a store in a store, so you don't have to do quite as much infrastructure work, they can be quite a lot cheaper. So, it's always a spre ad and so it just depends what's in the pipeline.
Thank you.
Matthew Abraham from Berenberg. First question is just in reference to your comment on February trading, Richard. So, you said that like-for-likes were broadly similar Q4, around 2.5% like-for-likes. We've got the benefit of pricing coming into this year. So, does that then suggest that there is a volume deterioration?
To unpack your comment on expecting challenging conditions to persist for the first half year, are you expecting a similar magnitude of year-on-year volume decline to persist from February to June?
We're planning our costs on that basis, which I think is prudent to do because what you don't want to do is put in too much labor, too much stock, and effectively be carrying too much cost. We're working on that basis that we have to kind of continue to see that sort of slightly negative like-for-like volume position. It's less significant for the supply chain and the factories because they benefit from all the volume that comes in from the new shops. In the like-for-like estate for stock and for staffing hours, that's the working basis for the first half of the year.
W e don't need to call it too far ahead anyway, so we can be quite flexible.
Okay, that's helpful and then just the only other follow-up question would be in reference to how that's compared to the market. You said that you've held your number one market position. Is that volume deterioration across those two periods entirely reflective of market decline or are there other factors?
That's what we think.
Yeah, so the market as a whole, all the data points that we've seen is there has been contraction across the market. So, therefore, from a volume perspective, I think the other piece to see on the sales sort of lever. What we are trying to do is we know that in this market that customers actually are going for premium products as well. So, we're trying to work hard on that premium market.
So, we're doing things like you can add a syrup to your latte. We're doing bigger bundle deals in areas such as delivery because we know that in delivery actually a four-part deal works better than a two-part deal. I think what you're trying to do in a market that's staying static and volume is down is we're trying to use value and quality to try and go after all the various levers. As Richard says, I think you're better to plan for the volume to stay as is, but we are certainly working hard as a team to try and make sure we do everything to really drive that further forward. But if you plan to that sort of volume prediction, then you keep your costs in the right place.
Okay, that's helpful. Thank you.
It's Conroy Gaynor from Bloomberg Intelligence.
So, just to go back to your slide on the store maturity, are you still expecting this two- to three-year payback for maybe the 2024 or 2025 cohort, just given some of the cost challenges that are out there in the market? And then secondly, you know, if even Greggs is perhaps having some volume pressure at the moment, it sort of leads me to believe that there might be some more distressed operators out there, particularly when April rolls around. So, do you think there's any opportunities for you there?
Ye ah, so it'd be nice to think so, but I think the reality is that the competitors who struggle tend to be in areas where we've already got quite good representation.
It's possible that some of their shops come back on the market, but the idea of buying a distressed competitor and backfilling it with Greggs, you tend to then take some shops you didn't really want as well. So, but it helps in terms of the supply of shops. And I think, you know, this is a period when, if anything, the opportunity to grow becomes better for us because, you know, terms are sharper. And typically in difficult times, Greggs has done this. It's gone on the front foot with shop openings. We did it coming out of the pandemic. And we've done it in previous recessions as well where effectively landlords are in a position where they love the covenant of the brand and the strength of it and the strength of our balance sheet. And often it means we can get better shops.
Maybe you have to be slightly more patient on getting the returns, but not materially. So, we'd be very happy to carry on and, if anything, try and go a bit faster in times like this.
Also, the two to three-year payback for this year?
Yeah, I think I have no reason to believe otherwise in that, you know, everything we're seeing from the new shop openings at the moment is very encouraging in terms of the strike rates and the startup. So, my expectation would be that they'll continue the way the previous cohorts have.
Thanks.
Can we just go to Darren?
Thanks, Darren Shirley, Shore Capital. Just a question on consensus. Richard, I mean, I see shares are off 13% today. Can you give us an idea of how you see consensus? Because you talked about that edge and lower in January.
Is that to come down another leg again today and maybe talk about next year as well?
I'm quite surprised if I'm honest at that because, you know, we're broadly reaffirming consensus for 2025. And then the adjustments that I think some people are probably making to their figures for the couple of years that follow are very much a rephasing, having taken into account the guidance that we've given on how the costs step up. So, you know, if you see through that, the medium-term opportunity is as good as it ever has been. And the basics are there. So, it'll be interesting to see whether, you know, some of the people who've always felt that Greggs was a little bit pricey start to think, actually, well, maybe it's not now.
I mean, how do you see consensus for this year and next? It's difficult for us to say. There's different sources.
Well, I mean, maybe afterwards we could just compare notes a little bit on what we're seeing. I know you have access to some views of consensus. We also kind of gather it from amongst you. We'd be sort of happy to have a chat about that. And maybe myself or Dave could pick that up at the end if that's okay.
But when do you talk about progress year on year?
Yeah.
You talk about profits, probably.
Yes, yes, yes, absolutely. Sorry, we should be clear about that. That right through this investment phase, although we've been trying to sort of describe how the cost base will move, we still believe that we will make year-on-year profit progress. So, for us, progress is on a number of fronts, but an important one of them is moving profit ahea d as well as sales.
Okay, helpful. Thank you.
Sreedhar Mahamkali from UBS. Maybe just to build on previous questions on the return on capital charts that you put up, Richard. I guess given the higher capital and what seems to be lower margins for now, how should we think about 2028, 2029 profitability? I know you don't quite think about it like that. It's more returns that way you're focused on. Just help us out in terms of where should margins be? I mean, theoretically, they should be higher than 2024 as in by the time you get there because you've got a significantly higher capital base to make back to the 20% returns on capital. So, just help us with that a little bit, kind of longer-term picture on margins. Or maybe put another way, 20% ROCE is consistent with double-digit margin or something around that. Or how should we think about it?
That's the first one. Secondly, evening, I guess it feels like it's going a bit slow, but I know we've talked about it literally being store by store, extending it and trial and error and so on and so forth. But what are you learning about it last couple of years about the opportunity? Is it really as big as you originally thought it was? And what are you having to tweak?
Thank you. I start with the evening and then we'll come to you. So, I think evening interests and we are really positive about. So, it's continued to be the fastest growing day part. I think when we first set out to do evening, we thought we needed a new menu after 4:00 P.M., which brought complexity for us. And we did trial that in a couple of geographies across the U.K.
We quickly found out that was not the case, actually, and I guess we've got ahead of the biggest competitor in the U.K. where they change their menu at 10:30 A.M. We change our menu at 11:00 A.M. You get breakfast up until 11:00 A.M. The rest of the day parts, you actually have got the rest of the menu, which makes it easier and more efficient for the shop team. What we find in the evening is that our current offering, the freshly baked products, about a third of our customers continue to buy that product. Made to order, that bigger eat is definitely one of the key data points for evening. That's why we're going, particularly on the delivery channel, around trying to do four-part deals rather than three-part deals.
Because if you go out in the evening for dinner, you sort of think about it as a decent size and then a sweet treat afterwards. And that's why we've done some of the hot sweet options as well. I think the really compelling piece for us in the evening is it's the organic growth where previously it was a step up in shop opening. So, therefore, profitability is becoming stronger as well because you then start to get more volume through the same hours in those shops. And the sweet spot for us that we have found is probably between 5:00 P.M. and 7:00 P.M. So, it's those consumers that are, you know, maybe on their way home from work, maybe on their way to cinema, maybe on their way to meet their friends, and they just need to eat on the go. So, that's almost the sweet spot.
The other compelling two pieces are probably the transport locations and the drive-throughs. So, you find that in both transport locations, actually, you do service that customer through till 11:00 P.M., 12:00 A.M. We've even got Liverpool Street open till 1:00 A.M. So, again, I think where you've got high consumer footfall. The piece we're still trying to work hard at is unlocking delivery in the evening. So, you'll see on the chart the delivery sliver in the evening is very small. That is, that's still a significant opportunity. What we've sort of learned as a team is we need to become famous for serving great quality products in the evening at great value deals. Then delivery will come. So, that's really the area of focus. We have got marketing metrics that measure where we are on awareness, and we increased our awareness across last year by a further 4%.
Again, we're penetrating the market around consumers knowing that we're open in the evening. So, there's lots to learn. And I think that menu innovation and things like Mac and Cheese, so a Mac and Cheese bundle deal, it's a decent size eat. It lends itself to someone wanting something in the evening. And that'll be continued what we innovate for this year.
And then the margin question. Yeah, I mean, I think longer term, there's structurally what we're building is a very similar model. It's different, but the cost ambition is very similar in terms of the cost efficiency of the model. It's very similar to what we have. It's just the smartest way of expanding it. So, I can't see why we wouldn't, other things being equal, be running at a similar sort of margin. But as you know, we tend to run the business for return on capital.
So, that's the primary objective is earning that strong return on what we invest. And the margin will be the result. But I would have thought, you know, that over that time period, we should be heading back to very, very similar sort of ratios. And of course, you get into this nice phase beyond the next couple of years where effectively you are getting all the benefit of the shop growth without having to add further costs. And you saw that in the CapEx guidance and the cash flow. Hopefully, in that phase, you end up in a very strong cash position again.
I'm conscious of time, so I'm probably going to suggest we take either one more question in the room or one more question online.
I think we're good online.
Is there a further question in the room?
Let me just check.
No, I think we're okay online.
If not, we are just going to thank you all for your time today. I am dashing off to a press call, but Richard will probably be around.
Sure , I'll hang around. Happy to speak to you.
Thank you. Thanks, everyone.