Bakery chain Greggs' success in fighting off the Government's unpopular pasty tax has failed to rub off on the company's sales figures.
Despite its profile being boosted by a 300,000-strong petition against plans to charge 20% VAT on its hot pasties and sausage rolls, the group's underlying sales were down 3.5% in the second quarter of 2012.
The group, which has 1,600 shops in the UK, said the deterioration from a decline of 1.8% earlier in the year was driven by the weather as shoppers stayed away from the high street. Profits were down 4.6% to £16.5 million in the 26 weeks to June 30, despite its efforts to keep a lid on costs.
Meanwhile, the group announced plans to open 28 franchise stores in Moto service stations, creating 500 jobs, following two successful trials as part of plans to expand beyond the UK high street.
Greggs played a key part in the campaign to convince Chancellor George Osborne to overturn the tax plans after chief executive Ken McMeikan marched on Downing Street to deliver the petition.
Mr McMeikan said: "There's no question that the profile of Greggs is significantly higher than it was before the pasty tax started.
"But we were not able to see how much that has benefited sales - the Chancellor announced the tax in March but in April it started raining and didn't stop. This really is a very resilient performance, given the exceptional weather."
Greggs' margins had been squeezed partly as a result of higher promotional activity, including a Lunch For Less campaign that offers baguettes for as little as £1.
The Newcastle-based group has opened 33 more shops than it closed this year and is on course to open a record 90 outlets in 2012. The openings helped push total sales up 4.5% to £350 million.
The group warned that a drought in the US threatens to push up grain prices but it has already pre-bought 80% of its food for the second half of this year, leaving it in a strong position as it looks to keep prices down.