Tim Martin, the founder of Wetherspoons, has launched a coffee and breakfast price war on the high street.
From next Wednesday he is slashing the price of Lavazza coffee with free refills in 880 pubs to 99p or less in an attempt to treble sales.
“If you switched from a leading high street chain where two cappuccinos a day would cost you a fiver to Wetherspoons, where two coffees will cost you less than a pound, you would save a enough money in a year for a holiday in St Lucia,” claimed Mr Martin.
Wetherspoons currently sells 50 million coffees and serves 24 million breakfasts a year. Mr Martin wants those sales to treble within 18 months. He admits doing that profitably will depend on pushing sales up quickly. “But we can make an honest buck,” he said.
“There is a huge market for coffee and breakfast,” said Mr Martin. We have large premises with better facilities than any coffee shop chain and we’re by no means full first thing in the morning.”
Shares in Wetherspoons fell nearly 4 per cent to 780p, as analysts downgraded their profit forecasts as a result of the price cuts. “More discounting equals more downgrades,” said Douglas Jack, at Numis, as he cut the broker’s forecast for Wetherspoons’ full -year profits to £77.5m.
First-half profits at the group dropped by 1 per cent to £37.5m, despite sales rising 9 per cent to £744m, which Mr Martin blamed on higher staff costs after it raised hourly wages by 5 per cent last autumn. He also warned that it would be tough to improve on last year’s stong second half of the year.Reuse content