Booming Wetherspoon will cause a stir in coffee bars

Rapidly expanding pub chain JD Wetherspoon is planning to take on coffee bar chains such as Starbucks head-to-head.

"In years to come it's going to be a massive area of growth for our company," said Wetherspoon managing director John Hutson.

"There's no reason we can't out-trade Starbucks over time. They certainly shouldn't be able to open next to a Wetherspoon's and take business away from us."

In January and February the chain ran a coffee promotion which boosted sales at some expense to gross profit margins and labour costs.

"Last week we sold 170,000 coffee drinks and that's double the number Wetherspoon sold on average before January," said Hutson. Over time there's no reason we can't double or treble that again."

His comments came as the company unveiled sales up by 30% to £226.7m during the six months to 28 January. Profit before tax was up by 31% to £20.5m.

Wetherspoon opened 42 pubs during the period, taking its total to 470. Capital investment was £73.9m.

Openings included the company's first two pubs in Northern Ireland, in Ballymena and Belfast. Since the end of January, seven more pubs have opened across the UK.

The company has licensing permission for a further 80 new pubs, 41 of which are under construction. It has agreed in principle to acquire 79 more sites.

Existing pubs performed well, with like-for-like sales increasing by 6.5% and like-for-like profit up by 8.4%.

An initiative to improve the quality of the chain's cask ales has seen 404 pubs awarded independent Cask Marque accreditation.

The group of 10 Lloyds pubs bought at the end of the last financial year increased their average gross weekly sales from about £10,600 to £18,300. Average sales across the whole of Wetherspoon's estate are about £23,000 a week.

Two Lloyds bars have been opened in Leeds and Hornchurch, Essex. When they were bought, both were close to existing Wetherspoon pubs.

A Lloyds pub is being built in Manchester's Printworks development, but Hutson played down suggestions that this could become a second brand name for the company.

"We're being quite cautious," he said. "We've not sat down and said, ‘This is the next big thing.' Once we get to £23,000 average sales in the Lloyds pubs, we will take it from there."

Wetherspoon's management is confident it can continue to expand at a rate of nearly two new pubs a week.

"If you exclude Lloyds, we did about 91 last year," said Hutson. "We'll do about the same this year and we're likely to do about the same next year.

"We're into the rhythm of doing them now and, because we only do them one or two at a time, we take it in our stride."

Asked whether Wetherspoon was interested in any of the pubs currently being sold off by the UK's larger brewers, Hutson said: "We've looked at a few of the packages and are always keen to pick up good sites."

But he said existing pubs were often priced too high for Wetherspoon, which spends about £1m converting a premises to its own style.

Many existing pubs were also too small for the chain, he said, which is why it preferred to open in previously unlicensed premises.

Like-for-like sales in February were up by 3.1%.