Wetherspoon to open up to 25 more pubs as sales increase
Pub group JD Wetherspoon has said it plans to open up to 25 bars over the year ahead as it reported a jump in first-quarter sales.
The chain is set to launch five to 10 managed pubs in the year to next August, adding to the 797 it already has, while also boosting its current 25-strong franchised estate with another 10 to 15 sites.
Wetherspoon has already opened six managed pubs in the new financial year so far – in Manchester Airport, Heathrow Airport, Crewe in Cheshire, Ferndown in Dorset, Dibden Purlieu in Hampshire and Kempston in Bedfordshire.
It reported an 8.2% rise in like-for-like sales in the 14 weeks to November 1, with bar sales leading the way with a 9.4% jump and food up 6.8%.
But sales growth eased back in the most recent five weeks, to 7.5% against the 8.6% surge seen in the first nine weeks of the quarter.
Chairman Tim Martin said: “The company has had a good start to the financial year.
“There are still three quarters to go and profit forecasts are very dependent on the level of sales growth.”
But he said the group was “comfortable” with current market expectations for profits of £76.4 million on a 53-week basis.
It saw pre-tax profits tumble 28% to £58.6 million for the 52 weeks to July 26 as rising staff and other costs offset rising sales.
Mr Martin took the opportunity in the group’s latest update to hit out at policies he said make it an uneven playing field for pubs and supermarkets, saying analysis shows recent Government moves to hike labour costs means the gap has widened even further.
He said calculations estimate the labour cost of a pint at £1.68 in pubs, but about 15 pence in a supermarket.
“This economic effect has widened the price gap between a pub pint and a supermarket pint in recent decades, which has been a major factor in pubs losing half their beer sales to supermarkets since the millennium,” he said.
“However, it has also resulted in a substantial decrease in employment,” he added.
“The net effect has been to push up the cost of a pint or a meal in a pub relative to supermarkets- and to reduce the number of jobs in the economy.”
Russ Mould, investment director at AJ Bell, said: “The good news for Wetherspoons is that its value-focused offering is outperforming a tricky hospitality market, as punters’ appetite for cheap pints and affordable grub comes to the fore. The bad news is that growth has moderated in recent weeks and Wetherspoons is heavily exposed to inflationary pressures thanks to its policy of prioritising volumes over margins. The company is sticking with guidance but continues to face a difficult balancing act as it looks to pass on some of its extra energy and staffing costs to customers without undermining its bargain credentials.”