British pub chain JD Wetherspoon plans to open an additional five to six pubs in Ireland over the next 12 to 18 months, founder Tim Martin said on Friday.
Speaking shortly after the group reported a small drop in annual profit as higher costs and new cut price food and drink offers added to margin pressures, he said the company’s Irish bars were performing strongly.
The group currently operates five bars in Ireland, including The Three Tun Tavern in Blackrock, The Forty Foot in Dun Laoghaire, The Great Wood in Blanchardstown, and The Old Borough in Swords. The Linen Weaver, the company’s first pub outside of Dublin opened in Cork city earlier this month.
“It’s still early days in Ireland with us just having opened four out of our five bars in recent months but there’s been an extremely good reception and it is obvious that people like our pubs,” Mr Martin told The Irish Times.
“We’re delighted with the sites and with the sales so far and the only people who don’t seem to be excited by our presence in Ireland are Guinness and Heineken for whom I’m about as popular as Vladimir Putin is in Kiev,” he added.
The chain, which famously fell out with Heineken last year, doesn’t sell either Heineken or Guinness products in any of its Irish bars.
JD Wetherspoon, which plans to open 30 pubs across Ireland over the next five years, was founded by Mr Martin in 1979. It operates more than 900 bars across Britain.
The company has acquired a number of properties in the Republic recently including a former homeless hostel on Camden Street in Dublin. The group is to invest more than €4 million developing a new pub and hotel at Camden Hall.
Many of the chain’s Irish bars have opened over the last few months and Mr Martin said it may be a few months now before the group announces any new pubs in Ireland.
“There might be a bit of a pause while we get planning permission and licensing together but we’re hoping to open another five or six pubs over the next 12 to 18 months,” he said, adding that the company was still scoping out potential properties.
“We’re wary of property prices because they seem to be quite high in Ireland despite the fact that local people keep telling us that they’ve halved in recent years. But we’ve got a site in Waterford and another one in Cork city and in the centre of Dublin and overall there’s about half-a-dozen other pubs in the pipeline too,” he said.
Wetherspoon, which offers cheap deals such as a beer and a burger and curry nights, said pre-tax profit for the year to July 26th had fallen 2 per cent to £77.8 million (€106.5m), which was broadly in line with forecasts.
That was despite underlying sales growth of 3.3 per cent and a 7.4 per cent rise in total sales, which includes new openings, to £1.5 billion.
The group, which in March cut breakfast and coffee prices with the aim of tripling sales by this time next year, said its operating margin for the year to July 26th was 7.4 per cent, down from 8.3 per cent in 2014 and from as much as 10.2 per cent in 2009.
“It’s a goodish performance on sales. The year started very strongly but it has tailed off a bit so that puts a little pressure on. We also decided to try and push up wages which we think is a good thing for the company and we just haven’t managed to increase profits. We’ve had good free cash flow and overall while we would have liked to have done a bit better on profits, but there’s always next year,” said Mr Martin.
He said that the company’s attempts to boost early morning trade was proving successful but stressed that customers were only just getting used to the fact that it was open for business earlier in the day.
“It’s counterintuitive for most people to go into a pub early in the morning. But people are getting used to it. Both coffee and breakfast sales are doing well with double-digit growth. Our prices are quite low to encourage trade so it’s not a huge money-spinner for us but we think over the next five to 10 years it will be an important part of any pub or catering business,” he said.
The company said trade in its new 2015/16 fiscal year would benefit from an improving economy and new openings. But that would likely be offset by margin pressure from higher wages, pub improvements and supermarket competition, meaning profits would be similar to, or slightly above, that achieved in 2014/15.
Underlying sales in the first 6 weeks of its new fiscal year were up 1.4 per cent, with total sales up 5.2 per cent, it said.
Shares in Wetherspoon closed at 720 pence on Thursday, down 4 per cent on a year ago, valuing it at £855 million.
Additional reporting: Reuters
