JD Wetherspoon has announced that increasing labour costs, taxes, and energy bills will negatively impact profits and could contribute to inflation across the UK economy.
Chairman Tim Martin stated that the pub chain anticipates profits to be “slightly below” market expectations due to mounting financial pressures.
The 794-location company is facing approximately £60 million in additional annual costs, driven by higher National Insurance contributions and wage increases. Additionally, it is dealing with an extra £7 million in energy costs and £2.4 million related to the Extended Producer Responsibility packaging tax.
“These cost increases will undoubtedly contribute to underlying inflation in the UK economy,” Mr Martin noted, explaining that the company will attempt to minimise price hikes.
This warning follows Wetherspoons’ report of a significant decline in profitability. Pre-tax profits fell by 31.9% to £22.4 million for the 26 weeks ending January 25, primarily due to rising wage bills, £10 million in repairs, and £9 million in business rates.
Despite this setback, revenues increased by 5.7% to £1.09 billion, with like-for-like sales rising by 4.8%. The growth was primarily fuelled by a 7% increase in bar sales, while food sales grew by 1.3%. However, hotel room sales declined slightly by 0.6% after the company decided to cut ties with high-commission booking platforms.
More recent trading data indicates a 2.6% rise in like-for-like sales during the seven weeks leading up to mid-March. The group opened six new pubs during the half-year while closing or selling an equal number, and it expects to have launched around 15 managed sites by the end of the financial year.
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