Wellbeing & Benefits

Cut price drinks and food pub chain JD Wetherspoon has again warned that the introduction of the national living wage could lead to more pubs closing and have a detrimental impact on High Streets.

Chairman Tim Martin insisted the policy will hit the company hard at a time when the pub industry is already struggling with high costs and competition from supermarkets.

Martin, who has long argued for a level playing field on VAT to enable the industry to compete with cheap alcohol sold in supermarkets, said putting up wages would further turn the financial screw on watering holes, particularly those in less affluent areas.

Wetherspoons said the impact of the rise in the minimum wage to £7.20 next April for workers over 25 would be “negligible” for it because it has already increased the minimum hourly rate for staff by 5 per cent last October and a further 8 per cent at the end of July.

The company, which pays about 40 per cent of its profits as a bonus or free shares, most of it to staff working in pubs, did not give details on longer-term costs as the Government’s proposals bring the living wage up to an estimated £9.35 an hour by 2020.

Martin said: “By pushing up the cost of wages by a large factor, the Government is inevitably putting financial pressure on pubs, many of which have already closed. This financial pressure will be felt most strongly in areas which are less affluent, since the price differential in those areas between pubs and supermarkets is far more important to customers.

“Leaving aside Wetherspoons, it is inevitable that prices in some pubs will have to go up. This will increase the differential between the prices paid for beer in the pub and supermarkets.”

Higher staff costs and utility bills squeezed Wetherspoons’ profit margins, while like-for-like sales growth slowed to 3.3 per cent in the 12 months to 26 July from 5.5 per cent the previous year.

Annual pre-tax profit was down 2 per cent at £77.8million, but fell by 25.1 per cent to £58.7million after pre-exceptional items including an £11.2million write-down on the value of under-performing pubs. The group is looking to open a further 15 to 20 pubs this year to add to its existing 951, with like-for-like sales expected to grow by 0-2 per cent.

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