Wetherspoon hit by smoking ban despite early summer sales rise

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JD Wetherspoon has started feeling the impact of the smoking ban on its alcohol sales but remains confident that sales of food and hot beverages will alleviate the impact of the regulation.

Shares in the pub operator dived more than 6 per cent after it admitted that sales growth slowed to just over 1 per cent in August despite a surge in sales in June and July. The company said that the initial sales up-tick following the introduction of the smoking ban was driven by the bad weather over the summer, but that the August performance was more indicative of the trading environment in the wake of the smoking ban. It described like-for-like growth of more than one per cent as "a reasonably good result".

The company pointed to its experience in Scotland where the smoking ban was enacted earlier than in the rest of the UK as proof that it could cope with the initial impact of the regulation.

Wetherspoon said that after an initial six-month margin hit in Scotland, sales in the region had staged an "encouraging recovery". It said that, in the longer-term, "we have no doubt that this legislation will be to the long-term benefit of the licensed trade".

While other pub operators have invested in sprucing up outdoors areas to cope with the smoking ban, Wetherspoon has focused on improving its food range. The company operates 670 pubs across the company mainly on high streets or in suburban areas where there is little opportunity to expand outdoor areas.

The move to increase sales of items unrelated to alcohol is starting to pay off with the company now the biggest seller of Lavazza coffee in the world. It said it is shifting 250,000 breakfasts a week and food sales account for about 30 per cent of its overall sales. The company is also benefiting from the surge in popularity of Pimms, the sweet drink that has become increasingly popular amongst young people, and Wetherspoon said it sells more jugs of the beverage than any other country in the world. Sales of wine have also held up well with the Fetzer Coldwater Creek brand the largest on-trade wine in the UK.