JD Wetherspoon boss Tim Martin today said price pressures in the pub trade are “ferocious” but he offered optimism that the worst is past.
For the half-year, profits crashed 91% to £4.6 million compared to 2019 when the pandemic struck, a sign of the strain on an industry still recovering from Covid.
The company is pruning its estate – it has 843 pubs with around 25 up for sale.
Sales in the period were up by 5%, and the pubs are well stocked with ales and staff.
Martin said: “Supply or delivery issues have largely disappeared, for now, and were probably a phenomenon of the stresses induced by the worldwide reopening after the pandemic, rather than a consequence of Brexit, as many commentators have argued.
“Inflationary pressures in the pub industry, as many companies have said, have been ferocious, particularly in respect of energy, food and labour. The Bank of England, and other authorities, believe that inflation is on the wane, which will certainly be of great benefit, if correct.”
Asked if governor Andrew Bailey is right, he replied: “He may be indulging in wishful thinking, but I hope he’s right. I don’t fancy his job.”
Some pub bosses have warned that the price of a pint in London could hit £10 if all energy costs were passed on to customers.
Chancellor Jeremy Hunt froze the tax on beer in his recent budget, offering some cheer for drinkers.
After a tricky Covid period, Wetherspoons is again paying staff bonuses -- £15 million so far this year. There is no divi to shareholders however, of whom the biggest is Martin.
Derren Nathan, Head of Equity Research at Hargreaves Lansdown said: “It’s been a solid start to the year for Wetherspoon. Its tried and tested value offer is holding it in good stead and there’s no sign of punters deserting the boozers despite the continuing cost-of-living crisis.
“Looking to the longer term we see Wetherspoon as a prime example of economic Darwinism. A company whose business model and brand is likely to see it exit a challenging period stronger than before.”
