Wetherspoon turns to food to counter decline in beer sales

JD Wetherspoon's profits before tax fell by 11 per cent in the past year because of the smoking ban. But the chain's sales – which were down by 1.1 per cent for the year as a whole – crept back up to 1.1 per cent year-on-year growth in the five weeks to the end of August, thanks to a growing emphasis on food sales.

"Sales were down a little, but we expected that in the first year of non-smoking, and we have had good growth in food sales," John Hutson, chief executive, said yesterday.

When the smoking ban came into force in July last year, there was no immediate impact. But by the end of October, growth was flat, year on year, and by the end of January it was down by 3 per cent. The third quarter was back to flat again, and by July was up by 0.4 per cent.

"It is the food sales and the drinks associated with that," Mr Hutson said. "The declines on the bar are starting to come back, but it is about people visiting the pub for a meal rather than just a drink."

Pub chains are increasingly looking beyond beer for their profits. Punch Taverns, which reported annual sales down nearly 3.5 per cent last week, is also betting on food. Whitbread bucked the gloomy trend altogether on Thursday with second-quarter sales up by 7 per cent, buoyed by its Premier Inns budget hotel chain that now accounts for more than 70 per cent of profits.

The pub trade is not in a happy place, particularly when it comes to the traditional pint. Beer sales have been on the slide since their high in 1979, when 29.5 million pints a day were drunk in pubs. They have been eroded by the decline of manufacturing putting paid to factory workers stopping in at the pub on the way home, alongside a growing preference for wine and heavy discounting in the supermarkets. Seven million fewer pints are drunk every day now, pushing daily consumption to its lowest level since the Great Depression.

But in the past year, pubs have gone into freefall. The smoking ban, rising commodity prices pushing up the cost of everything from barley to central heating, and the biggest duty hike on beer in 10 years, have taken their toll.

By the end of 2007, pubs were closing at a rate of four per day, compared with four per week in 2006 and just two per week in 2005, according to the British Beer and Pub Association (BBPA).

The urban pubs were the first to feel the squeeze, and 2 per cent of them closed in the six months to March. But the ill effects of the smoking ban are now hitting their rural cousins.

A spokesman for the BBPA said: "The smoking ban affected the traditional street-corner pub in towns first, because they were less able to offer food or an attractive smoking area. But that has now fed across the country and we will soon be seeing villages without any pub at all."

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