Short-term gain, long-term damage?

In short-term sales and PR gains JD Wetherspoon's price-slashing start to the new year appears to have paid off handsomely. The chain's latest trading report (see City & Business page 15) has revealed a 6.4 per cent rise in sales between January 4 and 18.

But many in the industry are concerned the move has sparked a price war. And these fears seem to have been confirmed with some licensees trying to undercut Wetherspoons by selling pints for 98p.

Others have resorted to offering the ultimate credit crunch-busting menu with main meals for just £1.

But given that the industry has long protested at the cut-price promotions in supermarkets, could these bids for survival leave the trade open to attack from the health lobby and end up putting even more pubs under pressure?

Moral duty

Nick Hogan, of the Swan with Two Necks in Chorley, Lancashire, described his 98p pint offer as a "tongue in cheek swipe" at Wetherspoons. He also blasted the chain for a promotion that community pubs will find impossible to compete with.

"You have a moral duty to your colleagues in the trade," said Nick. "I don't want my business to be the only pub in Chorley. Pubs are a vital part of the community but Wetherspoons doesn't care about the community."

Neil Gurr, licensee of the Cherry Tree in Glemsford, Suffolk, is also selling a pint of Greene King IPA for 98p for a limited period.

He insists the move is not a "cheap gimmick" but aimed at raising awareness about the damage inflicted by the price cuts of large pub chains on small pubs.

"We explain to our customers about why we are doing it and about the threats facing the trade. But Wetherspoons is only interested in a quick turnover," he said.

Bargain food

Sam Adeniji, licensee of the V bar in Seaford, East Sussex, has gone down the bargain food route by launching

a menu featuring seven main meals for £1.

He says he was inspired by Wetherspoons' price cutting strategy and lunchtime trade has more than doubled from an average of 30 covers to 65.

He explains the promotion works because customers are inclined to buy more drinks as the food is so cheap.

Sam also hits back at suggestions that such offers will hurt the trade in the long run.

"We all need to think more creatively about how to compete responsibly," he said. "It is not a case anymore of being able to open your door and hope for the best."

Tony Rabbits from the Four Crosses Inn near Cannock in Staffordshire claims he was the first to launch a menu featuring £1 meals in an act of desperation.

"Six months ago we had no custom. We launched a menu with two meals for the price of one and there was no improvement. This was our last ditch attempt."

He adds he was able to reduce costs by sourcing food locally. Since the menu's launch, trade has boomed and the offer has been extended from one day a week to seven.

But other licensees fear such reactions could aggravate the situation. Rick Robinson from the Willoughby Arms in Kingston-Upon-Thames, Surrey, says more customers will want to know why other pubs cannot match such offers.

"I don't think such measures will help the trade. All they are doing is upping the ante," he said.

Other licensees are also unimpressed, claiming such offers will result in poor standards and damage the trade's reputation.

"I wouldn't eat it because it obviously is not good quality food," said Nick. "There is no way that after sourcing everything locally, preparing it and cooking it that you can sell a quality meal for £1."

But the majority of the criticism has been reserved for Wetherspoons.

Rick, whose pub suffered a 30 per cent year-on-year drop in trade over Christmas, said: "It is now a hybrid between a pub and a supermarket. There is no way I could sell beer that cheaply. If I did, the VAT man would be on my back but Wetherspoons is big enough to handle it."

And Phil Hall, licensee of the Royal Oak in Easterton, Wiltshire, has slammed the chain for claiming responsibility because it has cut the prices of lower gravity beers in a bid to help cash-strapped customers.

"It is a place run by accountants for accountants," he said. "All they care about is shifting mass volumes of beer and the move could hurt an awful lot of pubs."

Wetherspoons hits back

But the chain remains defiant and rejects suggestions the move could put the industry on a par with supermarkets in terms of fuelling binge-drinking.

"The situation is completely different," a spokesman told The Publican.

"When you are in a supermarket, you can buy alcohol unsupervised and drink as much as you want.

"The idea that you can get drunk in Wetherspoons for £10 is ridiculous because we would not serve a person who was drunk."

The chain also rubbishes accusations of backstabbing fellow publicans, claiming its sole duty is to please customers.

"Our only moral responsibility is to run a good safe pub," the spokesman added. "No other business thinks about how a promotion might affect other businesses. And pubs are free to follow us if they wish."

However, as the recession deepens and the rate of pub closures continues to rise, the downward pressure on prices look set to become the norm despite the rumblings about the long-term damage to the trade.