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18/01/2025
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Profits have fallen at UK pub group JD Wetherspoon, as sales were hit by smoking bans and fewer drinks offers.
The group said pre-tax profits after one-offs had fallen 16% to £38.7m for the year to 24 July.
Unfavourable media coverage of binge drinking had hit customer numbers in town and city centres, it said.
In a bid to address the problem, the firm added it had banned two-for-one drink offers and discounts on doubles – a move which reduced drinks sales.
“In the case of spirits, this has resulted in the percentage of double measures reducing from 90% to 50% in the course of the last two years,” Wetherspoon said in a statement.
Wetherspoon added it had also been experiencing “a considerable rise in competition from supermarkets”, off licences and drinks bought abroad as more consumers opted to enjoy a drink at home.
Despite the decline in customers, full year sales rose 3%, or by £22.7m to £809.9.
Smoking bans bite
The number of new openings slowed to 13 from 28 last year – with sales at new pubs offsetting a decline elsewhere, Wetherspoon said, adding that like-for-like sales dipped 0.6%.
Meanwhile, its decision to introduce smoking bans at 36 of its 655 pubs had resulted in a 7% drop in turnover and a decline in profit margins at those pubs.
Critics have claimed that pubs should wait until a ban comes into force, as is widely expected.
But Wetherspoon said: “We feel that it is better to take the initiative, rather than adopting a non-smoking policy at the same time as everyone else, without significant previous experience of its impact.”
However, the company added that the move had led to higher costs – particularly labour costs, as a result of higher food sales at the converted pubs.
Annual operating margins have slipped across the board to 8.7% from 9.9% last year mainly as a result of rising utility, labour and repair costs it added.
In an effort to improve margins, Wetherspoon has been cutting costs at head office and its pub estate.
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