Soaring energy costs are resulting in flat profits at Greggs, the country's biggest bakery chain.
Shareholders were given the bad news at the company's annual meeting yesterday.
Chairman Derek Netherton said year-to-date profits at Greggs, which operates a bakery employing nearly 300 people in Birmingham, were materially below last year's figures.
"Costs have increased as we expected, with the rise in energy costs making a particularly strong impact on the first half," he said.
"As a result, profits to date remain materially below the level of last year," he added.
Like-for-like sales in the 18 weeks to May 6 were flat, continuing the trend already reported, said Greggs, which runs 1,300 UK shops, selling sandwiches and pastries.
It followed a similar warning in March when the group said this year's profit would be eroded by high power costs.
However the recent performance compared to a period of very strong growth last year, when like-for-like sales in the first 19 weeks increased by 5.8 per cent.
"For the rest of the year, we expect to see benefits from the actions we are taking to reduce costs and from a number of initiatives to drive turnover growth," Mr Netherton said.
Greggs is among the 50 per cent of companies across all sectors that Yorkshire Bank estimates are struggling to absorb the effects of rising fuel and energy costs.
With oil prices reaching record highs and UK fuel costs edging ever closer to £1 a litre, smaller firms believe they have the most to fear.
Of the Yorkshire Bank customers surveyed, 55 per cent of businesses employing fewer than 50 staff believed further rises would have a negative effect, as did 44 per cent of companies with between 50 and 250 workers.
But companies operating in sectors less traditionally dependent on energy are also now feeling the strain, with 56 per cent of retailers and 41 per cent of consultancy businesses reporting significant negative effects.
Yorkshire Bank chief economist Tom Vosa said: "Prices since 2004 have largely reflected the strength of the global economy, but the more recent increases reflect concerns about the stability of oil supplies. Any supply shock normally has a short-lived effect on price as demand is typically adversely affected in later quarters."