Pub chain JD Wetherspoon’s two Dublin bars are performing “in line with, if not better than expectations,” founder Tim Martin said as the group announced plans to take on coffee shops and supermarkets as it seeks to grab a bigger share of early morning trade both here and in the UK.
The chain, which plans to open 30 bars across Ireland over the next five years, said on Friday that profit before tax and exceptional items for the 26 weeks to January 25th declined 0.9 per cent to £37.5 million despite revenue rising 9 per cent to £744.4 million. Operating profit was down 1.1 per cent to £55.1 million while like-for-like sales rose 4.5 per cent.
During the period under review the chain came under increasing pressure from supermarkets, while higher utility costs and wages put pressure on group operating margin, which declined from 8.2 per cent a year ago to 7.4 per cent.
“It’s been a reasonable performance by us. Sales trailed off a little in the second quarter but these things happen in the pub business. It’s a very competitive market and people don’t like high prices if they can possibly avoid them,” Mr Martin told the Irish Times.
Morning trade
The pub group sells about 50 million coffees and 24 million breakfasts a year but announced plans to triple these sales over the next 18 months by introducing more competitive prices from next week. The group is also introducing several drinks offers, reflecting greater supermarket competition.
“The perception that there’s increasing competition from supermarkets is nothing new but it has sharpened a lot in the last few months and there’s also more coffee shops and restaurants which are providing an alternative to pubs so you need to be a jack-of-all-trades, which is difficult,” said Mr Martin.
He said that while the competition from supermarkets and coffee shop chains wasn’t as pressing in Ireland, the situation mirrored that in the UK with publicans increasingly under pressure.
JD Wetherspoon, which was founded in 1979, operates more than 900 bars across Britain. In Ireland it currently runs the Three Tun Tavern in Blackrock and the Forty Foot in Dun Laoghaire.
“They are both doing very well. They’re very busy and we’ve excellent staff in them and have had a really good reception from the public. We’ve made a great start and the performance is in line or exceeded expectations. We spent a lot of money on them so we thought we’d do well but it’s even better than we hoped,” said Mr Martin.
Irish expansion
The chain intends to open a number of new bars over the next year including pubs in Blanchardstown, Swords and Camden Street in Dublin city centre.
“We’ve acquired a few properties in Ireland and we’d like to get a few more at reasonable prices but that’s a tall order. We spend a lot of money on the redevelopment of our pubs and they’re quite big so we just have to keep looking for good-sized bars at decent prices if we can.”
“We never saw too many bargains in Ireland and I think that higher property prices are always an issue but we’re still confident that we should be able to open up two or three dozens pubs over the next few years all being well,” he said.
Having fallen out with Heineken last year in a row over pricing that saw the pub chain stop selling its products - which also includes Murphys - Mr Martin said that it ended with a “good old-fashioned Irish compromise with both sides really disatisfied.”
“We are happy enough with the way it ended really. They’re not selling us Heineken (or Murphys) but they are selling us Beamish and so we’re okay with that and I think they are as well,” he said.
The group’s first bar outside the capital, The Linen Weaver in Cork city, is due to open in the coming months and Mr Martin is hopeful that it too become a favourite watering hole with locals.
“I’ve been told that not selling Murphys might be a big handicap but we’ll see if Corkonians will cope with drinking Beamish. They said the same about Dubliners not drinking Guinness but that hasn’t proven to be an issue,” he said.
