Wetherspoon boss attacks Labour for ‘high street dereliction’ as profit falls
Pub chain Wetherspoon has hit out at the government for causing “high street dereliction” by hiking taxes, as the company’s profit slipped by a quarter.
The London-listed pub group saw revenue jump by five per cent to £2.2bn in the year to July – in line with analyst forecasts – though pre-tax profit fell further than expected, by 28 per cent to £59m.
Sir Tim Martin, Wetherspoon’s chairman, blamed the Labour government for hiking business rates, minimum wages and national insurance contributions (NICs).
He said: “The hospitality industry, as many commentators and companies have noted, has borne the brunt of government-led tax and regulatory cost increases, especially in the last two budgets.
“This has resulted in pubs becoming even more expensive than supermarkets, leading to job losses, closures and high street dereliction.”
Wetherspoon is famed for its rock-bottom prices, but analysts have predicted that this could mean rising taxes and energy costs will weigh more heavily on it than some of its higher-margin rivals. The pubco’s operating margin slimmed from 6.9 to 5.4 per cent in the last year.
Heatwaves boost summer sales
The FTSE 250 pub firm blamed a five per cent increase in costs for its falling profit. The group paid £46 more in wages, £31m more in repairs and £9m more in business rates last year.
Wetherspoon’s energy costs jumped by 77 per cent to £40m last year, it told shareholders. Energy costs and packaging taxes have also “weighed heavily” on hospitality firms in recent years, Martin said.
The pub firm said its sales picked up in recent months, helped by “exceptional weather”. Like-for-like sales grew by 8.6 per cent in the last nine weeks, it said.
This has been helped by “substantial progress in recent years in increasing the number of beer gardens and outside seating areas”.
Martin claimed Wetherspoon is outperforming the wider pub sector. Like-for-like sales at the company grew by 7.7 per cent in August, compared to sector-wide growth of 0.8 per cent, according to NIQ figures.
The pub boss told City AM that his attempts to keep prices low may be to blame for the firm’s drop in profit. He said: “I think everyone knows that Wetherspoon has a restrained attitude to pricing, which you could argue can cause short-term underperformance.”
Martin did not rule out hiking prices to keep up with rising costs. He said: “It was 48p per pint when I started. We have put our prices up, but we just haven’t put them up as much as everyone else. We’ve no plans to change our general approach as of today.”
The Wetherspoon boss reiterated his calls for John Healey to cut VAT on hospitality firms from 20 to 10 per cent.
The pub chain has backed a campaign, led by celebrity chef Tom Kerridge, which claims this tax break would be the easiest way to prevent swathes of insolvencies and job losses on the high street.
Shares in JD Wetherspoon jumped eight per cent to 880.5p in early trading.