Irish Spar retailer BWG is seeing higher returns from its new generation stores despite a hike in operating costs, group business development director Peter Kealy said this week.

Addressing delegates at The Future of International Convenience Retailing 2006 event in London, Kealy said the old Spar stores had an average gross margin of 25% and overheads of 21%, giving a net margin of 4%.

While the cost of running the fresh and foodservice-oriented new stores had pushed overheads up to 23%, gross margins in these stores were more than 30%, giving a net of more than 7%.

"Our net return is better and we will be putting the new offer into all new Spars and retro-fitting the others. We are now in the foodservice business in Spar in Ireland," said Kealy.

BWG, which is currently up for sale and operates the Spar and Mace franchises in the Irish Republic, has tested four pilot stores featuring food-for-now and food-for-later options including the much-talked-about Merrion Row site in Dublin.

BWG now has 22 juice and smoothie bars, 52 stores with its new branded coffee offer and 42 selling the new Signature sandwich range.

The pilot stores are based around five mission categories: enjoy now, take home, let's celebrate, stock up and your usual.