Meals fail to satisfy pub chain
Sep 6 2008 by Peter McCusker, The Journal
PUBS chain JD Wetherspoon has reported a fall in annual profits after stronger food sales failed to offset a decline in the drinks trade.
The group made profits in the year to July 27 of £55m, a decline of 11.4% on a year ago after like-for-like sales fell 1.1%. But Wetherspoon said the new financial year had started positively, with the comparable figure 1.1% higher and total sales up by more than 5%.
Faced with rising energy, food and labour costs, Wetherspoon said it needed to increase like-for-like sales by 3% this year to stand still.
Its like-for-like food sales rose 7.9%, compared with a decline in bar sales of 4.3%. But the shift to the lower-margin food business affected operating profits, down 4.3% to £87.2m.
Food sales account for 29% of trade, compared with 17% a decade ago and 5% at flotation in 1992. Including bar buys made with meals, food customers generate two-thirds of sales and produce weekly food sales per pub of £8,800.
Wetherspoon, with 694 sites, reckons it sells more meals per pub a week than any other major chain. The figures cover the first full year since smoking was banned in July 2007.
The group says tax rises and regulation have had a far greater impact than energy bills.
It said: “In the current financial year, we continue to estimate that increases in excise duty on alcoholic drinks, minimum wage-related costs and increased statutory holiday entitlements will amount to £16m.”
