Wetherspoon Profits Fall
March 7, 2008
PUBS group JD Wetherspoon saw its profit over the first half of the year drop by 13 per cent as the effects of the smoking ban south of the border took hold.
And chairman Tim Martin said that the group, whose Edinburgh bars include Foot of the Walk, Standing Order and The Playfair, was “cautious” about prospects for the second half, which could be further hit by the rising cost of food and beer raw materials, as well as soaring energy prices.
Mr Martin described the first half performance as “resilient”, given the challenging conditions as a result of the ban’s full rollout across the UK last summer.
Although a drop in beer sales hit margins and resulted in a drop in pre-tax profits to £28.5 million over the six months to January 27, overall turnover edged up 0.4 per cent to £440.2m. But like-for-like sales fell two percent.
On a brighter note, average food sale takings across the Watford-based firm’s 681-bar estate rose to £8600, from £7900.
“As anticipated, the introduction of the (smoking] bans resulted in a strong growth in food sales but a decline in bar sales, which put pressure on margins and profits,” said Mr Martin.
He said that during February, the group, which has 43 bars across Scotland, continued to generate “strong growth” in food sales but that was tempered by a continuing decline in bar sales.
“We expect second half sales trends to be broadly similar to those of the second quarter, and therefore have a slightly more cautious outlook for the second half of this financial year,” he said.
Wetherspoon is expecting a recovery in bar sales as customers get more used to the smoking ban. But it admitted that the “exact timing of this is still uncertain”.
Mr Martin – who established the chain in 1979 with a single pub in north London – also took the opportunity to take a swipe at the influence the antics of drunken celebrities could be having on behaviour and alcohol abuse.
He said there was “rightly
considerable concern” over yobbish behaviour from a minority – but added that police were wrong to focus on underage drinking when the main problem was cultural.
Mr Martin said: “This is demonstrated by examples of poor behaviour by a number of celebrities during the recent televised Brit Awards and by drunken celebrations in the context of sporting events and other occasions.
“This sort of behaviour is not a new phenomenon, and is frequently replicated by the general public during birthday parties, stag and hen parties and so on.”
Such yobbish behaviour was playing a part in falling attendance in bars with Mr Martin claiming it was intimidating for most other customers.
He added: “The correct approach for the authorities, in our opinion, is to concentrate on the message that pubs and drinking are legitimate activities, but they bring an obligation to behave responsibly.”
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