Wetherspoon profits squeezed by supermarkets

Tim Martin said that the market for breakfast is huge. Picture: Contributed

Tim Martin said that the market for breakfast is huge. Picture: Contributed

1
Have your say

PUBS group JD Wetherspoon is to throw down the gauntlet to high street coffee shops and supermarkets next week by slashing the price of Lavazza coffee in 800 of its pubs to 99p or less.

As part of the price war, Wetherspoon said it was also to introduce a £2.99 traditional breakfast in those pubs, compared with the current average cost of £3.39 in the vast majority of its outlets. It means the price cuts for coffee and breakfast are 16 per cent and 11 per cent respectively.

Tim Martin, the founder chairman who still retains a 26 per cent in the group, said the aim was to treble sales of coffees, teas and breakfasts from the current £150 million.

The business currently sells 50 million coffees and serves 24 million breakfasts a year. “There is a huge market for coffee and breakfast,” Martin said.

“We have large premises with better facilities than any coffee shop chain and we’re by no means full first thing in the morning.”

John Hutson, chief executive of Wetherspoon, whose 70-plus pubs in Scotland include The Standing Order in Edinburgh, said the company was “targeting” the likes of Pret a Manger, Costa Coffee and coffee in supermarkets with the drive, which begins next Wednesday.

The company already allows customers free refills on coffee between breakfast and lunchtime, but Hutson said it was unworried about customers dwelling over refills without buying any other products.

“We get a lot of that,” he said. “But they are not keeping people out. When other customers come in there is a buzz about the place.”

It came as Wetherspoon revealed yesterday that its first-half underlying pre-tax profit dipped 1 per cent to £37.5m, despite sales rising 9 per cent to £744m.

The group said part of the reason was increased staff costs, with an average 5 per cent increase for its staff last October, as well as an 11 per cent jump in utility costs.

The divi is pegged at 4p. Shares closed down nearly 4 per cent, or 31.5p, at 780p.

SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING

Get the latest business headlines from a variety of news sources emailed to your inbox each morning

Back to the top of the page