Greggs is forecast to slump to a £58m loss this year as the effects of the lockdown and social distancing hit demand for its sausage rolls and sandwiches.
Analysts at Jefferies predicted the bakery chain will swing to heavy losses after reporting profits of £114m in 2019.
Having initially restricted its service to takeaway only, Greggs temporarily closed all of its 2,050 stores on March 24 following the introduction of lockdown restrictions.
In April, the firm abandoned plans to reopen 20 sites as part of a phased trial due to concerns it could attract large crowds. It has since reopened a handful of stores in the Newcastle area and is planning to welcome customers back to a further 800 branches from mid-June.
Analysts warned Greggs will find social distancing difficult to manage at its stores due to them being smaller in size and regularly attracting queues.
Andrew Wade, analyst at Jefferies, said: “Greggs format is, by its nature, relatively unsuitable for a socially-distanced world, both from a customer and staff perspective.
“Greggs stores often have substantial queues extending out of the door, particularly at lunchtime in work-type locations. And this was before the implementation of social distancing that will require customers to be two metres apart.
“Simplistically, a queue of 20 customers might have been circa 16 metres long but, standing two metres apart, this extends to circa 46 metres long.”
Greggs has been increasingly been focusing on shifting its store opening programme away from the high street to work and travel locations in recent years.
Mr Wade warned that an anticipated fall in visits to these locations was likely to not only hit sales and profits but upset the group’s store opening plan.
As of its full-year results in March, Greggs was planning to increase the size of its estate. Mr Wade said the crisis was likely to put the store roll-out on hold temporarily and resume in 2022.
However, he added Greggs was likely to bounce back from the crisis, forecasting a £55m profit for the group in 2021 with the potential for profits to surpass 2019 levels by 2022.
“Assuming a vaccine or effective treatment by 2022, we look for 2022 profits to recover ahead of 2019,” Mr Wade said.