JD Wetherspoon hit by smoking ban

JD Wetherspoon has warned of increasing costs and falling sales as the smoking ban and economic slowdown had an impact on the pub group. Pre-tax profit fell 13% to £28.5 million in the half year to 31 January.

Chairman, Tim Martin, said rising costs including energy and food will make matters worse for the group, which has seen its share price more than halve in the last year.

Mr Martin added we expect second-half sales trends to be broadly similar to those of the second quarter, to experience some cost pressures and therefore have a slightly more cautious outlook for the second half of the financial year.

Like other pub groups, JD Wetherspoon has been hit by the smoking ban which came into effect last July and put many drinkers off visiting pubs. The group is also suffering from a collapse in consumer confidence and spending in the wake of the credit squeeze and slowdown in the property market.

Wetherspoon now gets about 60% of its trade from food and drinks with meals. Weekly food sales have increased from an average of £7,900 per pub to £8,600 and it is now selling 12% more coffees and teas.

According to John Hutson, JD Wetherspoon’s chief executive, it is expected that the smoking ban will be good in the long-term for the pub trade, but the exact timing of the recovery is ’still uncertain’.

We haven’t raised our prices. We cannot put prices up in a no smoking world. We cannot put prices up when we have negative like-for-like sales. It is too competitive out there, concluded Mr Hutson.

The pub group also said that the drunken antics of celebrities were fuelling the misbehaviour of drinkers. Rising concern about the minority of drunken people who misbehave is understandable, said the group.

However, the pub group said this cannot be solved by police crackdowns on under-age drinkers, as many of those who misbehave are older. The problem was cultural, it said.

JD Wetherspoons has over 650 pubs. The pubs generally do not play background music and generally do not have televisions or screen live sports or news and when there is a television, the sound is muted with subtitles displayed instead.

Since late 2006, some Wetherspoon pubs have offered free WiFi internet access. Many pubs have ITBox quiz machines.

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