Tim Martin, the chairman of JD Wetherspoon, has called on the Government to “refrain” from further tax increases as the pub group reported a sharp fall in profits. Pre-tax profits dropped by 28% to £58.6 million for the year to July 26, compared with the previous year, after the company was hit by higher wage and property costs.
Costs rise despite stronger sales
The company, which operates 792 pubs across the UK, said the benefit of stronger sales was more than offset by a 5.3% jump in costs. This included a £46 million increase in wage costs after the national minimum wage rose by 4.1% during the year.
Wetherspoon also reported a £31 million increase in repair costs, while its business rates bill increased by £9 million to £42.6 million, despite relief measures for pub operators.
Sales growth driven by drinks
Total sales rose by 5.2% for the year, with like-for-like sales up 4.2%. Bar sales increased by 6.1% year-on-year, while food sales were 1.2% higher. Revenues from slot and fruit machines grew by 7.4%, and hotel room sales rose by 1.3%.
More recent trading was boosted by “exceptional weather”, helping like-for-like sales jump 8.6% in the nine weeks to September 27. The company said it made “substantial progress” in increasing the number of beer gardens and outside seating areas across its pubs.
Tax burden on hospitality
Martin said the hospitality industry “has borne the brunt of government-led tax and regulatory cost increases, especially in the last two budgets.” He added that this has made pubs more expensive than supermarkets, leading to job losses, closures and high street dereliction.
“It is to be hoped that the powers that be will refrain from any further increases, since pubs and restaurants pay around 40% of their receipts as taxes of one sort or another – and provide immense financial support to the Treasury, as well as social support to the community,” he said.
