PUBS chain JD Wetherspoon today reported a fall in annual profits after stronger food sales failed to offset a decline in drinks trade.

Earnings fell by 11.4% to £55m during the year to July 27 following a 1.1% decline in like-for-like sales.

However, Wetherspoon said the new financial year had started positively, with the comparable figure 1.1% higher and total sales up by more than 5%.

Faced with rising energy, food and labour costs, Wetherspoon warned it would need to increase like-for-like sales by 3% this year to achieve a similar trading performance in the current financial year.

Wetherspoon, which has two pubs in Huddersfield town centre, lifted like-for-like food sales by 7.9% in the year, compared with a decline in bar sales of 4.3%.

However, the shift to lower-margin food sales hit operating profits, which were down by 4.3% to £87.2m.

Food sales now account for 29% of Wetherspoon’s business against 17% a decade ago and 5% when the company floated on the stock exchange in 1992.

Food customers generate about two-thirds of all sales and produce weekly food sales per pub of about £8,800.

Wetherspoon, which has 694 sites, said it believed it sold more meals per pub a week than any other major pub company.

It said sales of tea and coffee were up by 6.6% to average 443,000 cuppas a week.

During its first full year of trading following the smoking ban in July, 2007, Wetherspoon said it had been “strongly affected” by increases in taxation and regulation – which it claimed had a far greater impact on its business than energy bills.

In a statement accompanying the results, chairman Tim Martin said: “In the current financial year, we continue to estimate that increases in excise duty on alcoholic drinks, minimum wage related costs and increased statutory holiday entitlements will amount to £16m.” .