Pubgoers should expect prices to go up as a result of Labour’s first budget in 14 years, the politically outspoken boss of Wetherspoon’s, Tim Martin, has said.
Speaking as the hospitality chain announced record quarterly sales, Martin pinned the blame for an expected increase in pubs’ costs on the chancellor, Rachel Reeves, whose economic “pedigree” he has previously praised.
“Cost inflation, which had jumped to elevated levels in 2022, slowly abated in the following two years but has now jumped substantially again following the budget,” Martin said.
“All hospitality businesses, we believe, plan to increase prices, as a result. [JD] Wetherspoon will, as always, make every attempt to stay as competitive as possible. The company is confident of a reasonable outcome for the year, although forecasting is more difficult given the extent of the increased costs.”
Martin said cost increases were down to Labour’s policies, announced at last week’s budget, of increasing the national mininum wage and employers’ national insurance contributions.
From April next year, the minimum wage rises to £12.21 for workers aged over 21 and £10 for those aged 18-20, while the main rate of employers’ national insurance contributions will increase from 13.8% to 15%, with the threshold at which the tax is paid falling from £9,100 to £5,000.
Hospitality UK, the trade body for pubs, hotels and restaurants, has said it expects the twin measures to increase the cost of employing a full-time staff member by £2,500 a person.
JD Wetherspoon, which reported a pre-tax profit of £74m in the last full financial year, ending on 28 July, said its tax and business costs would rise by £60m in the 2025 calendar year as a result of the budget measures.
For now, the chain of 797 pubs and more than 50 hotels continues to outperform a sector that has struggled to recover from mass enforced closures during the Covid-19 pandemic, followed by the cost of living crisis.
Like-for-like sales in the first 14 weeks of its new financial year rose by 5.9%, adjusting for the impact of pub disposals. This drove up sales to a record 14-week high, although the company did not provide a sales figure. Total sales were up by 4.6%.
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The company referred investors to the CGA RSM Hospitality business tracker, which maps sales in the pub trade. It said JD Wetherspoon’s sales rose by 5.7% in September, compared with 1.7% across the industry, the 25th consecutive month of outperformance.
Wetherspoon’s has opened two pubs during the year to date and sold five. It plans to open a further seven, including at London Bridge station and Manchester airport.