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Cheap beer sees record profits at Wetherspoon
11.09.09
JD Wetherspoon showed rivals how to prosper in a recession today, when it unveiled a record set of results that defy the blight in the pub trade.
The offering of cheap, cask beer and no music or television proved resilient to the downturn, at a time when six boozers are closing a day across the UK.
Chief executive John Hutson said: "A good company should be able to trade through difficult situations. We have navigated our way."
Wetherspoon's profits increased 7% to £97 million for the year to the end of July, on revenue which rose 5% to £907 million.
That enabled it to pay bonuses -including to bar staff - of £20 million as a reward for good service. The company undertook 4000 "mystery drinker" tests over the year to check up on the conviviality of the publican and the flow of the beer.
The pub chain won't pay a final dividend to shareholders while it moves to pay-off debts of £87 million.
"We will restore the divi once we have sorted out the bank refinancing," said Hutson.
Wetherspoon prospers from opening its pubs for breakfast and Lavazza coffee, ensuring a steam of custom all day. It sells more coffee than most coffee shop chains.
As the downturn bit hard at the start of the year, Wetherspoon responded by selling pints of Greene King for 99p. That's now moved up to £1.29, still the cheapest pint on the high street.
Wetherspoon opened 39 new pubs this year, taking its total to 731 of which 193 earn a recommendation from the CAMRA Good Beer Guide.
The company is still, fairly or not, often associated with a certain type of customer. Two patrons made the headlines recently when they were arrested and placed in jail for being drunk and disorderly after celebrating their wedding with a romantic meal at their local Wetherspoon pub.
Reader views (7)
Generally in London Wetherspoons is where all the tramps and dole drinkers go, and as the dole seems to be the only growth area in Britain they've chosen their market wisely. There are Wetherspoons at Angel and at Highbury and Islington tube stations, either end of Islington, and they are both horrible and full of tramps.
- Squiz, Islington
Thomas Hayes; the main reason prices in pubs are higher than in supermarkets, is that the overheads in pubs associated with your product are necessarily greater. In a supermarket, nobody serves you your drink. There is no need for glasses, tables and furnishing! Rental costs per square yard for giant out of town supermarkets are less than for pubs which tend to be centrally-based . Finally, I suspect that supermarkets also sell booze cheaply to lure in customers for their other products.
- K Lynch, Dublin
Am pleased to have been a Wetherspoon's shareholder since the first week they went public.
This article has failed to mention that like for like sales and operating margins are up. The headline of cheap beer is also disingenuous when compared to supermarket prices. As for labels I do not drink alcohol and still regularly frequent a Wetherspoon's establishment because of their varied range of non alcoholic drinks. I just wish they would promote them more.
With regard to beer prices and drunken behaviour. The following extract taken from today's Wetherspoon results announcement makes interesting reading:
'For some years, the government's approach to concerns about excessive alcohol consumption has been to increase both taxes and regulations for pubs. This has had the apparently desired effect of increasing the cost of drinking in pubs, compared with drinking at home or in public places. Coincidentally, there has been a huge increase in 'off-trade' sales of alcoholic drinks, combined with a decrease in sales volumes in pubs. We believe that the net effect of this has been to increase levels of 'unsupervised' drinking and directly contribute to many pubs' closure, at the same time exacerbating the problem of 'binge-drinking'.'
- Harry H, London UK
this company knows it business,the food is very good and its easy to place your order,places and glasswear are very clean EXCEPT for the hand towel that the food servers carry in there back pocket,wipe the tables with it and then bring in your food useing it to carry the hot plates,STOP THAT im coming over this week for a fish and chips,bogner regis area,ILL be watching,congrats to the companyJ D W
- Phil, usa
At present,I buy my drink at my ;ocal supermarket because he prices work out at about 50p per pint. If they can do it, why cant the pubs and clubs if I can buy it at the pub at those Weatherspoon prices then I may go back to using my local pub.
T H Leeds
- Thomas Hayes, Leeds UK
Probably also contributed to the weekend's high cost of policing these drunks, and probably also responsible for filling the A & E department at weekends.
- Dom, London
7% sounds like a good increase but when you scrutinise the article, you realise that there has been a 5% increase in the number of pubs. This explains much of the additional profit and probably the 5% increase in turnover.
They are maintaining their turnover because people are moving downmarket in the Recession. How will they fare when things start improving?
- Andrew W1, London
