Good morning, and thank you for taking the time to join us today for the Greggs interim results presentation. Firstly, just thought it'd be worthwhile just letting me introduce myself to many of you in the room. I am the new CEO at Greggs. I've taken over the baton from Roger Whiteside at the AGM in May. It's lovely to meet many of you for the first time. Some familiar faces in the room, so that's also nice to see. A little bit about me. I joined Greggs in 2010, so been with the business for 12 years, and during that time I've had responsibility for the retail function, the people function, and the property functions combined together at various points during that time.
Hopefully, as I've undertaken various roles within the business, in terms of the strategic pillars going forward, I've played a key part in pulling together that plan that we presented to you back in the autumn of 2021. As the new CEO, with the team, we feel really confident about those strategic pillars. We feel really confident about our ability to realize those growth opportunities and also execute that plan extremely well. The other piece that I just want to mention today that you'll have seen in our announcement is that we have announced our chair succession. Ian Durant will step down as Chairman of Greggs from November 2022.
The fantastic news is that we have got Matt Davies, who hopefully many of you will know, who will join us today as Chair Designate and then will take over from Ian at the beginning of November. It's worth saying that Ian has been a fantastic Chair during a period of extraordinary growth, but also he's really driven diversity in our board. While we are very sorry to see him go, we're absolutely delighted that Matt is joining us. I believe that Matt and I will work extremely well together, so that's a great appointment. What we will do today is that Richard and I will take you through the agenda. It's the usual format in terms of the agenda.
I'll outline the highlights, pass over to Richard who will take you through the financial performance, and then I'll come back and just take you through the operational and strategic review, and then talk about the outlook for the year. I'm really pleased with the results in the first half and the fact we are continuing to make good progress on our strategic priorities. As you can see on the slide, total sales are up just over 27% for the first half of the year. That's 22.4% on a like-for-like basis. As you'll know, with like-for-like figures at that level, that is partly the pandemic recovery, that is, on a year-on-year basis. Now, the first half year profits are in line with 2021.
However, within that number, there are many moving parts, and Richard will talk you through the detail on that in a few moments. We remain extremely positive with our progress on our shop estate, and it's great that we've already opened 70 new shops in the first half. That brings us to 2,239 shops trading as at the second of July, and we're continuing towards progress of our ambition to have more than 300 shops. We are also making good progress in developing our new channels and the evening daypart. I'll talk more about that later, but we remain very confident in extending our trading hours from our existing shop base.
Our Menu Development continues to be a key area of focus with good progress on our healthier choices and our growth categories, and we've brought to market in the first half two new salad meal boxes. Very importantly, our ESG agenda, which we've landed as our Greggs Pledge commitments, we had a great milestone in the first half of the year. On the beginning of July, we opened our Eco-Shop in Northampton, which will be a testbed of sustainability initiatives for us. On that point, I will hand over to Richard for the financial performance.
Great. Thank you, Roisin. Just taking you to slide six, where you can see just a high-level overview of the financial performance for the first half. I've given you two years of comparatives here, because the first half of last year was still heavily affected by the sort of post-pandemic environment, and you can see some of the significant differences, certainly on the sales line, as we've recovered from particularly restricted conditions in the first quarter of last year. I've given you 2019 as well, which was the pre-pandemic measure, and on that basis, you can see that although profits before exceptional items were flat year-on-year in the first half, you can see they've moved ahead significantly since the 2019 level, which in itself was a very successful year for Greggs.
It doesn't really give you the color of how many moving parts there have been year-on-year in the first half, but we will come to that in just a moment when we look at margins. At a high level, GBP 55.8 million of profit before tax in the first half of this year, and that translates to GBP 0.448 diluted EPS. Let's have a look at the sales number next. I think this chart is the best way we could find of illustrating what's been an unusual sort of first half in terms of comparatives. You'll be aware we've been reporting sort of two-year comps to try and avoid the closure period that we had in Q2 of 2020.
That's no longer possible of course. What you see in this chart on page seven is the sort of normalization of our like-for-like. Going forward, we can now report a standard sort of like-for-like number, and that's what you see in the blue bars here. The blue bars represent the one-year like-for-like against 2022. Sorry, 2022 against 2021. The orange bars show you what was happening last year comparing like-for-likes to the pre-pandemic levels. You can see the sort of natural recovery against a soft comp in Q1, and then you can see the normalization of that as you go through Q2 and then on into July. We've reported here the first 4 weeks of July as well.
The combination of those is the green line, which is almost like, well, where are we versus the pre-pandemic level. That's your three-year like-for-like. You can see the kind of the progress, steady progress through there with a slight uplift in May, which coincides with the point at which we did price on some small price increases to consumers. Broadly, a stable picture going forward, and I think we'll be able to just report this now on a more traditional one-year basis again. Pleased also with the exit rate there, coming through July.
If we get into those sort of the shape of the P&L a bit more now then, you've got here on slide eight the P&L ratios, which are settling down to a kind of a more normal level again, having been significantly affected by different issues through the pandemic. Sales, we've talked about. At the gross profit level last year had the benefit of a very low VAT rate, and obviously cost inflation has picked up in the first half, and that's coming through in the figures that you see at the gross profit level now. Distribution selling costs last year, again, were flattered by temporary relief from business rates, which is worth about GBP 15 million year-over-year. That's now back in normal territory again.
I think at the admin expenses level, nothing much to report there. In absolute terms, admin expenses are broadly level with last year. But obviously the denominator in this ratio has increased significantly as sales have recovered. Overall, you'll see that the margin in the first half was 8%. That's getting back to a more normal level. If you look back historically, Greggs' margin in the first half is always slightly lower than it is for the full year. That reflects the seasonality of our sales pattern with traditionally a stronger second half sales pattern and also the way some of the costs fall.
Bank holidays, the cost of bank holidays hit the first half more heavily than the second half. That's getting back to a more normal position. If we move into cost inflation, which of course has been a subject of real focus for us in the first half, and it's perhaps the thing that has changed most significantly since we last spoke to you back in March. At that time, I talked about 6%-7% as being the sort of level of cost inflation we thought we would see this year. We now think it'll be around 9%, and on a like-for-like basis across all cost areas. The thing that's moved most significantly is food inflation.
We saw a real step up in that from sort of April onwards and I think items such as dairy, for example, have been the ones that have shifted most along with energy costs. Now, we've got quite a lot of forward cover. From where we are today, we've got about five months of our prices fixed forward. That looks beyond the end of this year as well. If you take the second half, we've got about four of the six months fixed in food, packaging, and energy, which on the pie chart here are the green and purple elements. Of course, the biggest element of our cost base remains people costs and wage and salary inflation there is running at about 4.3% for the year overall.
There's an additional NI cost from April onwards, so 1.25% extra National Insurance from April 2022. The kind of perhaps the one sort of benign area in the cost picture is shop occupancy costs, where we're continuing to see good progress on our rents coming out of the pandemic. The overall kind of rent ratio is now 4.8% in the first half, and you can see the reduction in that versus previous periods. Overall, I mean, I think the inflation step up is obviously unwelcome, but we've got good security of supply.
We haven't seen any physical disruption, but obviously sort of dealing with cost inflation has been important and that's why we put through the increase that we did in mid-May, which appears to have landed reasonably well, as well as you could expect anyway. If we turn to CapEx, then in the first half of 2022, we invested GBP 42 million in the business, and you can see the shape of it on this slide. Compared with last year, there's a step up in the amount we are investing for new shops, obviously, as we accelerate the pace of opening those shops and the equipment that goes with them. We will see a greater acceleration in the shop refurbishment line in the second half.
If you look to the very bottom of the chart, you can see that, although in the first half we only refurbished 16 shops, we will refurbish about 100 in the year as a whole. You'll see a step up in that area. Then the other big investment that will come at some point in the second half is when we step up the investment for the future growth, that will be required in our supply chain. When we talked at the Capital Markets Day and in subsequent presentations about the growth ambitions of the business, we said we have capacity in the supply chain to last probably 18 months, 2 years at the current growth rate. Beyond then, we do need to bring additional manufacturing and logistics capacity on stream.
We're in the process of looking for sites on which to develop that capacity. This is a bit of an unknown in terms of phasing, depending on the timing of when we acquire land and start the development, it could fall either side of year-end. There's a bit of an unknown sort of phasing question here. At this stage, we've left the guidance as it was at GBP 170 million for the year as a whole, but that could move, depending on how quickly we acquire sites. Moving to the sort of cash and dividend picture. As ever, Greggs is a very cash generative business, and particularly when we're in growth mode. We generated operating cash inflow of GBP 65 million in the first half.
The comp from last year is actually even stronger, but that reflects the recovery of sales post-pandemic. As we grow, we get a working capital inflow. We saw the opposite when we closed the shops in the pandemic. Last year was flattered by the recovery of those sales. A strong cash generation in the first half, which left us with GBP 145 million of cash at the half year, and that's after having paid special dividend of GBP 40 million back in April as well. It's a relatively high cash level, but that cash is then carried into this investment program I've described to support the growth towards 3,000 shops and beyond.
In reserve, we have this GBP 100 million revolving credit facility, which we put in place post-pandemic in order to give us the ability to trade if there was ever another interruption to our ability to keep the shops open. On the tax front, we have a relatively low effective tax rate this year at 17.7% is our best estimate as we sit here. That's primarily because of the availability of super-deductions. If you remember a couple of budgets ago, the Chancellor introduced these super-deductions for investment in plant and machinery. They run until April 2023, and there's been no guidance as to whether there'll be any continuation, so we assume that they stop then.
We also assume that the corporation tax rate will increase as planned from April 2023. You'll see in our forward guidance, we're still guiding at the same level of around 24% next year for the overall effective tax rate, and then about 26% ongoing. That's slightly higher than the headline rate because we have a certain disallowable cost, particularly in our shop fitting, which typically adds about 1% to the overall tax rate that we incur. Finally, the dividend, given the sort of the flat year-on-year earnings position, the board considered that just keeping the dividend as it was last year seemed to be the most effective level to set it at.
For the full year, we'll go with our normal policy of a dividend which is twice covered by earnings. We'll just declare the balance into the final dividend for the year. That's a quick run through of the financials. Obviously, I'll come back for questions later, but now I'll hand you over to Roisin to give you an update on operations and strategy.
Thanks, Richard. Okay, so this slide is just a little bit of a reminder that last autumn, we presented to you our ambitious plans to address the many growth opportunities available to us as we progress to become a multi-channel food-on-the-go brand. I guess it's really worth just saying that as CEO, I remain extremely confident with the team, and we are progressing well against those plans. Worth just pulling out the strategic investment that we've made over the past several years, so that's on the estate and the brand and the supply chain and systems capability, provides us a really strong platform on which to build.
We've made good progress in the first half of 2022 as we seek to make Greggs more accessible to more people through our new digital channels, through our extended trading hours, and I'll now just go through each of those growth channels just now. Now, you might be forgiven for thinking that this photo with the palm trees is our international ambition to actually go somewhere very exotic. However, it's actually Leicester Square, which, we opened a couple of weeks ago. I guess in typical Greggs tongue-in-cheek style, we opened with much fun and fanfare, a blue carpet, bouncers, first 200 customers got freebies, and even Pasty Kween, who you might know who she is, but a social media influencer who revealed her sausage roll dress. Just a lot of fun and attention around that sort of new shop.
More importantly, we are on track with a plan to grow and develop our estate, and that's the biggest element of our strategic plan. It's also the element that we have got the best track record in, and it's the one where we have most momentum currently. We have 2,239 shops now open. Great news is we're on track to open 150 shops this year in 2022, but we also believe that rate of opening will continue beyond 2022. With the caveat of making sure that we deliver those shops that return the return on investment that we expect. We've previously shown you the opportunities in some of our underrepresented catchments, which are on the slide.
Again, just worth saying that as we now open in those catchments, we're even more confident about those catchments that we will move to as we get the opportunities. Last month, we opened our 400th shop with our franchise partner. That was with Rontec, who is a new partner. We've also, so far this year, opened 3 drive-throughs. We are now open in Birmingham and Liverpool Airport. We have got a further 3 shops in Central London, so that is The Strand, it is Leicester Square, and it is Liverpool Street Station that we opened yesterday. I'm seeing some nods, so hopefully some of you may have visited.
As we look at the refit programs, we also continue to work hard to make sure that those refits deliver for us, both in terms of the space that we need to service those digital opportunities, but also that food preparation capability that is so important to us as we move into extended day parts, such as the evening. As Richard mentioned, we're on track to refit 100 shops this year. Now, that's a different number to the one that we gave you earlier this year, and that's probably for two main reasons. One, we've had to ramp that refit program back up from a standing start 'cause we stepped that down during the pandemic. I think the second reason is probably more important.
We've been doing lots of trials around the different pieces of equipment, the layouts, and how we make what we call the Series 3 shop work to make sure that it is simple and efficient for our teams. We've taken that learning, and now we will move forward at pace. Let me talk about extending our evening day part. This is a really exciting one for us, and we've got a quite a significant cross-functional team working together on this one. We know that 35% of the food on the go market is after 4:00 P.M., and we have got a very low penetration currently in that day part.
By opening later and improving our menu options in the evening, particularly in hot food, which we know is what customers are looking for in that evening day part, and also offering delivery, we are really confident that we can significantly grow that evening day part, and we're utilizing the current shop base. So far this year, in terms of progress, we have got 300 shops that are trading to 8:00 P.M. In fact, some actually trade beyond that. We are well on track to get to our ambition of 500 shops for the end of the year. What I would say is we continue to learn from these openings, and we take the learning from the first half of the year into the second half of the year.
It's a bit of an iterative journey, similar to the one that we went on with breakfast growth, where we continue to look at the menu, we continue to trial new products, we continue to take the insight from the customers, and we continue to move the shop opening times just to really understand, is eight o'clock the right closing time for us? We'll go on that journey through the second half of the year because we need to make sure that evening day part is about profitable sales. I think the really great piece to say is that, as we would have stood here, or Rod and Richard would a few years ago, saying that the breakfast day part was our fastest growing part of the business, currently that is evening, albeit it is from a low base. On to Digital.
Our work on Digital has been something we've been working very hard on, and we managed to accelerate the progress in this area during the pandemic, and it now feels like we're in a really good place to be able to move forward. On delivery, we have continued to work with Just Eat and extend delivery into more shops where we believe this opens up further catchment opportunity. We now sit at 1,180 shops offering delivery to our customers. We've probably all read the news reports that talks about the changing shape of the delivery market and the post-pandemic shift from delivery into walk-in, and we have seen that ourselves within our own shops, so that is our experience.
I think the good news for us though is that the majority of our new delivery trade is incremental, and delivery gives us a new channel to our customers to be able to access us that we didn't have before. We of course have got the new Greggs app that we relaunched last year. I'm hoping that you're all in the room with it on your phones. If not, you should download it, 'cause you get access to our loyalty proposition where you earn stamps, and then you can swap those stamps for free products. We know that that increases the customer visits to our shops. It also allows you access to click and collect. That means you can skip the queue, and your favorite product will be waiting and ready for you when you turn up to collect it.
You also can access some of our personalization agenda. We've offered personalization in breakfast for a number of years for our customers. In the first half of this year, we brought pizza personalization to the market, so that's the Mexican Chicken Pizza or the Pepperoni Hot Shot. We plan to do a trial in the second half of the year on baguette personalization for our customers. I think in digital, it's probably worth saying that we've still got much to learn, but we have recruited some key experts into the team. I have to say, using both their knowledge and their relentless drive and enthusiasm, we really believe that we can accelerate on this journey. All of those strategic priorities are really critical to our growth, but we must remember that fundamentally, we are a food business.
Key to our success is ensuring that we have a great menu of tasty, great value food and drink, and our focus continues in this area of menu development, both focused on the growth pillars, but also on delivering our ESG commitments through our Greggs Pledge. This year, we broadened our healthier choices, and we introduced two salad meal boxes. We have the Smoky Cajun Rice with a Barbecue Chicken and Sweet Corn Fritters. We also have the Vegan salad meal box, which is a Sweet Potato Bhaji and Rice, which is my favorite. The great news is those meal boxes are served cold, but you can take away and eat them.
Actually, they're under 300 calories, so that is an added bonus. Now to support our evening growth, we continue to increase the number of hot cabinets that we've got in our shops. Making that hot food proposition accessible to our customers is really important. We've got 867 cabinets currently in the chain, and by the end of this year we will have a further 400. That continues to open up those choices to customers. As I said earlier, through personalization, we've opened up some other options like the Mexican Chicken Pizza, like the Pepperoni Hot Shot pizza, that are now available. One thing that's not on the slide, but as a Glaswegian with a very sweet tooth, we've also got a hot trial of sort of hot sweet products.
Sort of our version of desserts in the evening. That's Hot Yum Yums with our salted caramel dipping sauce. It's chocolate brownies with a hot chocolate dipping sauce and it's cookies. I know that menu very well. We're looking just to see if we can extend that beyond the evening because it is a real winning product for us. Now, as a vertically integrated business, as Richard has said, we need to make sure that we continue to expand that capacity to be able to deliver on our growth plans, along with our systems capability. We will shortly be commissioning the pizza line in Enfield that we have talked to you previously about, and that will add significant pizza capacity for us, which again, is really important if you think about those new personalization options.
We will also be starting work to add a fourth savory line to our Balliol campus in Newcastle. That's where we'll produce more of our iconic sausage rolls and bakes. As Richard mentioned, we continue to explore site options for us to provide future capacity to meet our growth plans. On systems, just to say it's probably a massive credit to the whole Greggs team that we are now through our SAP implementation. We continue with the roadmap on digital systems now as I've talked about. I think the other piece of great news is that we've been working on an upgraded recruitment system. That will really help us improve our time to hire. From that point of interviewing a candidate to actually getting them starting with us and earning money.
It'll also improve that candidate experience when you join Greggs. Really important in a tight labor market, but even more important when we've got real clear growth ambitions. Really important as a business that's always prided itself in doing the right thing, we are delighted with the focus and progress that we continue to make against our commitments made in our Greggs Pledge. This is our version of ESG. Clearly this is getting ever more important. It's fantastic that in the first half of the year we have achieved the accreditation of our National Equality Standard. That's for all of our work on diversity and inclusion.
As part of our carbon agenda to reduce emissions, we have set our Science Based Targets in line with supporting our ambition to be net zero in Scope 1 and 2 by 2035, and in Scope 3 by 2040. Other great piece of news that I've mentioned is we opened the Eco-Shop in Northampton at the start of July. Really that's sort of, that's a test bed of all the sustainability initiatives that we can bring together in one place and really understand, you know, how can we make this step change to go on our journey to be a greener Greggs. Within that shop, I mean gosh, there's lots of examples, but some of them are, air-assisted toilets. We have got solar glass panels.
We've got flooring made from recyclable materials, and then we're trying to encourage both our customers and our colleagues to do more recycling, both at front of shop and at back of shop. Lots and lots of opportunities. Our ambition is to see which of those work and then look to see how quickly we can roll them out across the chain in line with our Pledge ambitions. Looking forward, I think, you know, probably CEO standing here for the first time, it's really pleasing given all of the complex environment, all of the macroeconomic pressures we're facing to be able to state that we continue to perform well. We do know, however, that consumer disposable incomes are under pressure. We know that we offer exceptional value, and that is a piece that we really need to work hard to protect.
We are trading in line with plan, as we've said. Most recently, the like-for-like sales in the four weeks up to the thirtieth of July have delivered 13.1% growth, which is excellent. Very importantly, when I've talked to you about the strategic growth objectives, we are still on track in our journey to become a multi-channel larger business. Taking all of that into account from myself and from Richard, then the board's expectation for the full year remains unchanged. Just before Richard and I take questions, it's probably worthwhile just summarizing from my perspective. You know, this is an excellent business. We have proven that we are extremely resilient, especially during the pandemic. Despite all of the economic headwinds, the macroeconomic factors we're facing, we are trading very well.
As a team, we have high confidence currently in our trading and in our progress against our strategic targets. Thank you and lovely to meet you all.