The pubs group JD Wetherspoon has shelved plans to turn its entire chain non-smoking until the Government ban comes into force, after seeing a steep drop in sales in venues that have been converted.
Wetherspoon backtracked from plans to turn its entire 655 managed pub estate non-smoking by May, and decided to wait until the middle of next year when its rivals will also have to be smoke-free under a UK-wide ban. It is runninga trial of 49 non-smoking pubs and is sticking to its policy of making all new pub openings smoke-free.
John Hutson, the chief executive, said: "The ban is just over a year away and it's simpler to go with everyone else. It's less confusing. We're facing a backlash from customers who are saying 'why are you doing this now?'"
The converted venues suffered a 7.6 per cent drop in like-for-like sales in the quarter ended 22 January. Profits margins fell 4 percentage points as the pubs relied more on lower-margin food sales while more profitable takings from the bar and fruit machines collapsed. Trying to tackle the decline, Wetherspoon is poised to rollout new food menus.
The hit on its business could get even worse when Scotland goes non-smoking on 26 March and its 39 Scottish pubs join the existing 49 trial pubs. Wetherspoon predicts it will have about 100 non-smoking pubs by July, including new openings.
Mr Hutson admitted there could be "a couple of lean years" once the UK-wide smoking ban comes into force, judging by the experience of other places that have introduced smoking bans such as California and Ireland. Jim Clarke, the finance director, said: "What you lose in year one you start to build back in year two, then you're pretty much back where you started."
This summer's World Cup is likely to add to the group's woes. Wetherspoon pubs do not showsports or play music. The company has installed plasma screens across its estate, but Mr Hutson admitted: "There will be a downturn during this World Cup." In addition, surging energy prices will add £8m to the group's heating bills this year.
Overall pre-tax profits rose 21 per cent to £27.4m in the six months to the end of January, thanks to cost-cutting measures such as cheaper glasses and wage control. The new licensing hours have not led to a rise in drinking as people drink more slowly, but allow Wetherspoon to open from 9am to target the breakfast market. The first major pub operator to enter this market, it sells 30,000 breakfasts a week compared with 10,000 a year ago. It is trying to undercut rival coffee-shop chains by offering Lavazza coffee for only 69p a cup (99p in central London).Reuse content