JD Wetherspoon has announced plans to open up to 25 new pubs over the coming year, following an 8.2% jump in first-quarter like-for-like sales. Chairman Tim Martin said the company is comfortable with current market expectations for profits of £76.4 million on a 53-week basis.
The pub chain intends to open between five and 10 managed pubs in the year leading up to next August, adding to its current portfolio of 797 sites. It also plans to expand its franchised estate, which currently numbers 25, with a further 10 to 15 locations.
Strong start to the financial year
Six managed pubs have already opened in the new financial year, at Manchester Airport, Heathrow Airport, Crewe in Cheshire, Ferndown in Dorset, Dibden Purlieu in Hampshire and Kempston in Bedfordshire.
The company reported an 8.2% increase in like-for-like sales during the 14 weeks ending November 1, with bar sales up 9.4% and food sales up 6.8%. Growth cooled in the latest five weeks, slowing to 7.5% compared with the 8.6% spike recorded in the opening nine weeks of the quarter.
Chairman Tim Martin commented: "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."
Profit decline and cost pressures
The group experienced a 28% plunge in pre-tax profits to £58.6 million for the 52 weeks ending July 26, as escalating staff and operational costs overshadowed rising sales.
Mr Martin used the latest update to criticise policies he claimed create an uneven playing field between pubs and supermarkets, stating that analysis shows recent Government decisions to increase labour costs have widened the gap further.
He said calculations put the labour cost of a pint at £1.68 in pubs, compared with just 15 pence in a supermarket.
Impact on the pub trade
Mr Martin said: "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 added: "However, it has also resulted in a substantial decrease in employment. 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."
