JD Wetherspoon boss warns of pressure from cost hikes and tax disparity

The boss of JD Wetherspoon has warned that the pub firm will come under pressure from surging labour costs and tax disparities with retail rivals over the coming year.

However, the firm – which runs 796 pubs across the UK – revealed a 5% rise in sales in recent weeks and pointed towards positive trading for the rest of the year.

Tim Martin, founder and chairman, said the group is on track for a “reasonable” performance over 2025 despite pressures on consumer budgets.

However, the company reported lower profits for the past year and said it will face further cost pressures.

Wetherspoon has said it expects to face a £60 million hit from higher labour costs from April, when increases in the national minimum wage and national insurance contributions come into force.

Mr Martin said the cost increase will amount to “approximately £1,500 per pub, per week”.

He added: “Since labour costs are around 35% of the pub industry’s sales, compared to around 11% for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade.

“The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs will weigh heavily on the pub industry.”

Analysts have predicted that the group will have to increase food and beer prices in order to offset higher costs.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said the cost increases will be “frankly crippling and will likely eat further into profit margins going forwards”.

“The cost of a burger and pint will have to rise to help mitigate this pressure, which hardly encourages more punters through the door.

“In all, aside from the depths of the pandemic, life has probably never been tougher for pub and bar operators.”

It came as Wetherspoon revealed that pre-tax profits dropped by 8.6% to £32.9 million for the year to January 6.

Profits were lower despite a 3.9% increase in revenues to £1.03 billion for the year, compared with a year earlier.

It added that like-for-like sales have increased by 5% over the seven weeks to March 16.

Shares in the company were 7% lower in early trading on Friday.