Wetherspoons: Cheap pints the casualty of higher costs

Pub giant JD Wetherspoon said this could therefore result in “profits slightly below market expectations,” following a period of slower sales growth and higher expenses.

Chairman and founder Tim Martin said the company has faced “substantial increases in costs,” including higher national insurance contributions and wages, which are expected to add around £60 million to annual expenses.

Wetherspoon is also facing an additional £1.6 million tax bill this year under the Extended Producer Responsibility packaging levy.

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Mr Martin said: “The company has a strong pipeline of new pubs and planned openings include Manchester Airport, Heathrow Airport, Paddington station, Charing Cross station, and Shaftesbury Ave in central London.”

Wetherspoon opened eight new pubs during the quarter but also closed eight, keeping its total estate unchanged.

Robinhood UK lead analyst Dan Lane said Wetherspoon’s “value proposition” continued to draw customers despite broader economic pressures.

Mr Lane said: “Wetherspoon pubs are pulling their weight but it’s becoming a familiar story of costs (labour and taxes in particular) absorbing that growth.

“Sales are holding up, with the company’s value proposition still bringing in customers in a stretched consumer environment.”

Meanwhile some experts think this might impact the cost of their products.

Susannah Streeter, chief investment strategist at Wealth Club, a non-advisory investment service said: “There will be worries that cheap pints might be the latest casualty of higher costs facing pubs, given JD Wetherspoon’s latest update.

“It demonstrates the extent to which the sector is grappling with mounting financial pressures despite steady demand.”