JD Wetherspoon: pub prices set to fall

Related tags Alcoholic beverage Trade Public house Tim martin

A sharp fall in the cost of buying a pub is on the cards, according to JD Wetherspoon.The drop in prices is expected as operators cut back on...

A sharp fall in the cost of buying a pub is on the cards, according to JD Wetherspoon.

The drop in prices is expected as operators cut back on acquisitions in the face of worsening trading conditions.

The company is also predicting a fall in profits of around £6m if the tough market continues for the rest of the financial year.

Chairman Tim Martin said most pub companies have stopped or cut back on acquisition of new sites and property prices should fall as a result.

He said: "Two years ago you had Bass and Whitbread, as they then were, acquiring half of all pubs on the market.

"They're not out there anymore, and the likes of S&N and the regional brewers just aren't acquiring."

Drink sales are flat and the company is going back to the negotiating table to obtain lower prices on any pub deal where contracts have not been exchanged.

In a trading statement, Wetherspoon said like-for-like sales in its 600-plus pubs dropped sharply during November, down to 3 per cent from the 5.3 per cent reported for the three months to the end of October.

The problem has been made worse by a sharp change in the sales mix, with food sales rising by 14 per cent in November while drinks sales were flat.

The company said the combination of the change in margins and lower sales growth "would reduce profit expectations by about 10 per cent", down to around £57m from the £63m forecast for the end of the year to July 2003.

Mr Martin said the company expected to be able to get a better price on any deals that are in the pipeline.

The savings should leave Wetherspoon with sufficient funds to meet its target of opening 50 to 60 pubs this financial year.

On the fall in trade, Mr Martin said: "It's always easy to blame the weather but we enjoyed good trading during an Indian summer through September and into October, which ended when the weather took a turn for the worse."

The sudden growth in food sales could be attributed partly to extended opening hours.

Wetherspoon serves breakfast from 10am while most of its pubs cannot serve alcohol until 11am. There has also been an increase in the number of outlets with children's certificates, boosting sales of family meals.

Mr Martin said the revised profit forecast is based on trading continuing to be difficult, but added the company was "cautiously optimistic" of an improvement in the run-up to Christmas and into the New Year.

"Like-for-like sales were up to 4 per cent in the last week in November. We're keeping our fingers crossed."

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