Pub operator JD Wetherspoon has seen its margins squeezed after three-months of flat sales.
The company said the combination of increasing food, labour and marketing costs, the latter adopted to attract customers lost after the start of the smoking ban last year back into its pubs, would keep profits under pressure for the duration of 2008.
For the 13 weeks to 27 April like-for-like sales at Wetherspoon's fell 0.1%, with a slow February followed by an improvement in March and April.
Operating margin fell from 10.6% to 10.1%.
The company said its recent nationwide real ale festival (27 march to 14 April) had increased beer sales by 7% for the period with 2.5 million pints passed over the bar.
However it warned that for the rest of the year bar sales would remain challenging and it was cautious of the short-term prospects.
- East Anglian brewer and pub operator Adnams has bemoaned an "extremely difficult year for the drinks industry" at its annual general meeting of shareholders yesterday and said it would continue to focus on its green credentials as a spur for growth.
By Christopher Walton
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