A PUB company that owns sites across Notts has taken the battle to the coffee bars by signing a deal with the Coffee Republic chain.

The Pub People Company will turn part of The Gatehouse on Upper Parliament Street into a branded area serving cappucinos and lattes rather than cask ales and lagers.

It hopes to hook in city centre customers who would otherwise walk past and head for a branch of Starbucks or Costa Coffee.

The deal could also make a difference to profits in an industry that has been hit hard by a drop-off in drinkers – the profit margin on a cup of coffee is 75% compared to 45% on a pint of beer.

Andrew Crawford is the operations director of The Pub People Company, which is based at South Normanton.

He said the trial at The Gatehouse could lead to roll out of the coffee shop concession into other pubs in the group provided they were in the right kind of site.

"Coffee in pubs has always worked reasonably well, but with the proliferation of branded coffee shops on the high street it hasn't really met customer expectations," he said.

"The Gatehouse is in an area with very high footfall and not so far away from branches of Starbucks and Costa Coffee.

"The pub already attracts a large number of office workers and shoppers for its local cask ales and lunchtime food.

"The endorsement of a strong coffee brand will strengthen the overall offer and fits perfectly with the current decor and furniture style, including the continental style covered outside drinking area."

The initiative comes at a tough time for the pub industry, which has been hit hard by stay-at-home drinkers.

"It's never been as hard as it is now," said Mr Crawford. "Our sales have actually held up very well over Christmas. The problems are more to do with the costs of complying with legislation and pressure on profit margins.

"This could well bring in another type of customer and lead to us extending our hours by opening earlier. It's also an area where the smoking ban will work in our favour."

He added: "From a business perspective the profit opportunity is also attractive.

"The investment is relatively low, the labour is already on site and the gross profit margin on coffee is high at over 75% whereas draught beer at the Gatehouse is only 45%.

"Consequently with a relatively small increase in coffee sales the impact on the bottom line overall is excellent and will strengthen the pub operating profit and loss account."

Mr Crawford said the move was one of a number of innovations being considered by Pub People.

"Pubs have evolved from what they used to be, they will continue to do so and this is one part of that," he said. "We are looking at different parts of our pubs to see where we can bring in new income streams."