British pub chain JD Wetherspoon has today reported a small drop in annual profit as higher costs and new cut price food and drink offers added to its margin pressures.
Wetherspoon, which has over 900 pubs offering cheap deals such as a beer and a burger and curry nights, said pre-tax profit for the year to July 26 had fallen 2% to £77.8m, broadly in line with forecasts.
That was despite underlying sales growth of 3.3% and a 7.4% rise in total sales, which includes new openings, to £1.5bn.
The chain has opened several new pubs in Ireland in the past year.
Wetherspoon, which in March cut breakfast and coffee prices with the aim of tripling sales by this time next year, said its operating margin for the year to July 26 was 7.4%.
This was down from 8.3% in 2014 and from as much as 10.2% in 2009.
Wetherspoon reiterated comments made in July that Britain's new higher minimum wage would put unsustainable pressure on a pub industry already struggling with taxes and competition.
The company said trade in its new 2015/16 fiscal year would benefit from an improving economy and new openings.
But that would likely be offset by margin pressure from higher wages, pub improvements and supermarket competition, meaning profits would be similar to, or slightly above, that achieved in 2014/15.
Underlying sales in the first six weeks of its new fiscal year were up 1.4%, with total sales up 5.2%, it said.