John Lewis unveiled its first food hall at its flagship Oxford Street store on Wednesday and is targeting sales of between £15 million and £25 million a year.

The retailer also revealed that it will increase capital expenditure this financial year to£180 million from£80 million last year, ploughing cash into store openings and refurbishments across its 26-store portfolio. Stablemate Waitrose, which co-developed the food hall, will invest at least the same amount.

The 17,000 sq ft food hall, in Oxford Street’s basement, carries more than 8,000 seasonal and speciality food lines selected from Waitrose’ master assortment, as well as 250 exclusive lines.

Waitrose managing director Mark Price said the John Lewis food hall also presents an opportunity to research top-end product ranges and concession opportunities for Waitrose.

John Lewis managing director Andy Street said: “We have got a fantastic prestige store. It really is the all-under-one roof destination.”

The opening was the final stage of a£64 million refurbishment of the Oxford Street shop, adding more than 40,000 sq ft of selling space to bring the total to 300,000 sq ft. Sales at the revamped beauty department are up 18 per cent in the half year to date. The menswear department, which has been enlarged by 25 per cent, is up 12 per cent since May.

Street said the retailer was poised to sign a new store in addition to the 10 shops already scheduled to open.

A second food hall will open at the Cardiff John Lewis store, which is due to open in 2009.