JD Wetherspoons Plc set to start coffee price war as it reports a dip in operating profit of 1.1% to £55.1m down from £55.7m last year. Revenue’s increased 9% to £744.4m and like-for-like sales were up 4.5% with profit before tax £37.5m up from £36m in 2014. The interim results for the period 26 weeks ended 25th January 2015 were said Tim Martin, the Chairman of J D Wetherspoon, “reasonable.”
He said, “The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff.”
The company, which has 71 outlets in Scotland, is to open new pubs in Stirling, East Kilbride, Edinburgh and Largs in the near future, and has identified further sites in Hamilton, Edinburgh, Leven, Stranraer, Clydebank and Forfar.
Martin also revealed that the company aims is to triple coffee and breakfast sales over the next 18 months, as well as, introduce several drinks offers, reflecting greater supermarket competition, including Magners Cider and Punk IPA.
He said, “The company has successfully established a strong coffee and breakfast trade in recent years, selling approximately 50m Lavazza coffees and teas per annum and about 24m breakfasts – more breakfasts (according to research by CGA Peach) than are sold by Caffè Nero or Pret a Manger. We are increasing our efforts in this area by introducing more competitive prices from Wednesday 18 March. Lavazza filter coffee, with free refills, will be available at 99p or under, between 8am and 2pm daily, at approximately 880 pubs. We are also introducing more competitive prices for breakfasts. Our aim is to triple coffee and breakfast sales over the next 18 months. On the same date, we are introducing several drinks offers, reflecting greater supermarket competition, including Magners Cider (568ml) and Punk IPA (330ml) at £1.99, at approximately the same number of pubs. Marketing and labour costs may be higher than anticipated in the second half, as a result of the coffee and breakfast campaigns.”
He concluded, “The second half of the last financial year was strong, which will make it difficult to improve on that performance in the current year, although we expect a reasonable outcome for the full financial year, even so.”
In the six weeks to 8 March 2015, like-for-like sales increased by 1.6%, with total sales increasing by 5.6%.