Wetherspoon snapping up failed pubs to fuel expansion
Pub chain JD Wetherspoon is increasingly shunning conversions in favour of snapping up failed pub sites at bargain prices as the recession hits home.
Speaking at the company's half year results today, chief executive John Hutson said around half of its 35 new openings this year would be "second-hand" pub sites.
Traditionally the pub company has looked to convert alternative use sites into pubs to avoid expensive premiums and refurbishment costs.
However, Hutson said the market had now gone completely the other way, with it now more affordable to take failed pubs of landlords' hands and pay a small refurbishment fee.
"It's reversed. Now as many pubs are in receivership they cost almost nothing to acquire," said Hutson.
The chief executive said that with many single landlords stuck with failed high street pubs it was advantageous to get Wetherspoon in rather than gut the property and try to entice a tenant from a different sector, which would most likely result in lower rent anyway.
"Of course we want something in return," said Hutson, "and in some cases that's a rent reduction of 20% to 40%."
As a result of the shift, Wetherspoon expects its capital expenditure in the full-year to be £16m lower than the previous financial year, despite the fact it will open 12 more pubs.
However, the company is expecting to cut opening for the 2010 financial year back to around 25, and took an exceptional charge of £3.1m in the six months to do with disposals of properties the company no longer plans to develop.
As of the half-year period, Wetherspoon operated 714 pubs.
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By Chris Druce
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