Britain’s biggest pub chain is ramping up its incursion into the breakfast market as it seeks to take business from the high street coffee chains.
JD Wetherspoon said it would cut breakfast prices from Wednesday, selling coffees with free refills for less than a pound across 880 pubs as it seeks to triple coffee and breakfast sales over the next 18 months.
The company’s push comes as it continues to struggle to grow the business in the face of supermarkets selling cheaper alcohol.
Tim Martin, chairman of JD Wetherspoon, said the company sells 50 million Lavazza coffees and teas a year and about 24 million breakfasts, more breakfasts than Caffe Nero and Pret a Manger.
He said ramping up its breakfast business was likely to mean higher labour and marketing costs in the second half of its financial year.
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The drive came alongside mixed interim results which showed like-for-like sales rose 4.5 per cent but operating profit fell 1.1 per cent to £55.1 million in the six months to January 25.
Profit before tax and exceptional items was down 0.9 per cent to £37.5 million in a period when the company opened a net nine new pubs, taking its estate to 936.
“We expect to open approximately 30 pubs in the financial year. This is at the lower end of expectations, owing mainly to a slower-than-anticipated rate of regulatory approvals”.
Mr Martin called trading reasonable, “although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff”.
The pub group’s outlook for the second half of the year was cautious, with Mr Martin pointing to a strong second half last year “which will make it difficult to improve on that performance in the current year”.
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“We expect a reasonable outcome for the full financial year, even so.”
The company continues to rail against what it argues is an unfair tax system that favours the supermarkets, but said lobbying efforts had led to a “growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country”.
Keith Bowman, an analyst at Hargreaves Lansdown, said: “In all, the news lacks material inspiration, with the share price drifting lower in opening stockmarket trade. The dividend yield is not what it once was, coffee and breakfast campaigns are set to increase marketing costs, while comparatives for the second half provide a challenge. For now, analyst consensus opinion continues to point to a hold.”
Shares in JD Wetherspoon were down 3.13 per cent to 786.10p in early trading