The group, which sells approximately 50 million Lavazza coffees and teas per annum and about 24 million breakfasts – more breakfasts (according to research by CGA Peach) than are sold by Caffè Nero or Pret a Manger, is set to increasing its efforts in this area by introducing more competitive prices from Wednesday 18 March.
Lavazza filter coffee, with free refills, will be available at 99p or under, between 8am and 2pm daily, at approximately 880 pubs. It said it would also be introducing more competitive prices for breakfasts.
The company said that its aim is to triple coffee and breakfast sales over the next 18 months.
On the same date, It is introducing several drinks offers, which it said reflected greater supermarket competition, including Magners Cider (568ml) and Punk IPA (330ml) at £1.99, at approximately the same number of pubs.
Sales
The company reported like-for-like sales growth of 4.5% for the 26 weeks to 25 January. Total revenue was up 9% to £744.4m but pre-tax profit was down 0.9% and operating profit fell 1.1%. Operating margin was 7.4% (2014: 8.2%).
In the six weeks to 8 March 2015, like-for-like sales increased by 1.6%, with total sales up 5.6%.
The group warned that marketing and labour costs may be higher than anticipated in the second half, as a result of the coffee and breakfast campaigns.
During the period, the company opened 12 new pubs and closed three, bringing the number of pubs open at the period’s end to 936. Of these new openings, 11 were freehold purchases. It expects to open approximately 30 pubs in this financial year. This is at the lower end of expectations, owing mainly to a slower-than-anticipated rate of regulatory approvals.
Competition
Chairman Tim Martin said: “The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff.
“As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs. Thanks mainly to the work of Jacques Borel’s VAT Club, there is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country.
“The second half of the last financial year was strong, which will make it difficult to improve on that performance in the current year, although we expect a reasonable outcome for the full financial year, even so.”