Tim Martin, the politically outspoken boss of the JD Wetherspoon pub chain, has praised the new Labour chancellor’s economic “pedigree”, as he called for tax changes to help the struggling hospitality sector.
Martin regularly publishes economic and political commentary alongside his company’s results and has previously voiced support for Brexit and Boris Johnson.
However, on Wednesday, he made overtures to Rachel Reeves, as he blamed the previous government for failing to relieve the tax burden on the struggling hospitality sector.
“The last government failed to implement tax equality between pubs and supermarkets, leading to pub closures and underinvestment,” Martin said.
“Wetherspoon hopes that the current chancellor, with a Bank of England pedigree, will understand how many beans make five, and rectify this inequality.”
Martin has often lamented the fact that 20% VAT is levied on food sold in pubs but not in supermarkets, which he says unfairly allows thriving shops to subsidise artificially low beer prices, at the expense of the struggling hospitality sector.
More than 500 pubs closed in 2023, according to figures from the British Beer and Pub Association, as the industry wrestles with the higher price of energy, rents and labour.
While many pubs are still struggling to recover from Covid-19 pandemic restrictions, which Martin heavily criticised for being harsher on pubs in comparison with other sectors, JD Wetherspoon’s 801 venues have consistently outperformed rivals.
The company recorded further growth in revenue in the 10 weeks to 7 July, a period that includes most of the Euro 2024 football tournament.
Sales were up 5.8% in the period and 7.7% in the year to date, a period in which the company shut 26 underperforming pubs and opened only two new ones.
“Sales per pub are approximately 21% higher than pre-pandemic levels, which has helped to compensate for the very substantial increase in costs,” Martin said.
He reeled off a list of cost increases since the pre-pandemic 2019 financial year, including a £164m rise in the cost of labour, £28m on energy, £38m on repairs and loan interest costs that are up by £16m.
The pub company has sought to boost takings by introducing beer gardens, staff rooms, above-bar glass racks and improved beer dispensing systems. It expects profits to be in line with market expectations, indicating earnings for the year of about £75m.
“These numbers don’t just happen by themselves, said Derren Nathan, an analyst at the investment firm Hargreaves Lansdown.
“Wetherspoon consistently outperforms its peers and continues to invest in measures to improve serving times and the customer experience. That’s helped it to mitigate an inflationary-led assault on its cost base.”
He said an England victory in Wednesday night’s Euro 2024 semi-final against the Netherlands, which would book the team a place in Sunday’s final, could provide a “final flurry” before the end of the financial year.
The fellow leisure analyst James Wheatcroft, of Jefferies, said he expected Wetherspoon’s to benefit from customers “trading down”, thanks to its cheaper prices, coupled with good locations and investment in the pubs themselves.
