Boss of JD Wetherspoon calls on Prime Minister to cut pub food taxes

Chairman Tim Martin said the company is set to face a £60m jump in labour-related costs in April, amid increases in employers’ national insurance contributions and the minimum wage.

He said the business is in a “reasonable” position but that forecasting is “difficult” in the face of impending tax and wage increases.

As a result, he renewed calls to equalise the VAT paid on food by pub and restaurant businesses with that of supermarkets.

Most food and drink in shops has zero VAT whereas restaurants and pubs have a standard rate of 20 per cent.

“This tax advantage allows supermarkets to subsidise the price of beer they sell,” Mr Martin said.

“The VAT distortions that exist today will inevitably create more supermarkets and less pubs.

“Wetherspoon therefore calls upon Sir Keir Starmer to redress this imbalance, thereby striking a blow for tax equality and ending discrimination in favour of dull dinner parties.”

It came as the pub company reported higher sales over recent months.

It said like-for-like sales rose by 5.1 per cent over the 25 weeks to January 19 compared with a year earlier.

It said rising food sales were a key driver, increasing by 5.6 per cent year on year, while bar sales were up 4.5 per cent.

This helped to offset a 6.5 per cent slump in the sale of its hotel rooms.

Wetherspoons also highlighted that sales accelerated around Christmas, with a 6.1 per cent increase over the three weeks from December 16 to January 5.

However, this was weaker growth than reported by pub rivals such as Marston’s and Young’s over the festive period.

Wetherspoons currently runs an estate of 796 pubs after selling six sites over the past year, while it has opened two new venues.

Julie Palmer, partner at Begbies Traynor, said: “After an impressive performance for most of 2024, it seems the mood music has changed at JD Wetherspoon, as it delivered a lacklustre Christmas performance that lagged behind peers and highlights a greater sense of uncertainty as we enter 2025.”

Richard Hunter, Head of Markets at interactive investor, commented: “On the face of it, Wetherspoons enjoyed its festive season and indeed the last six months as a whole, with like-for-like sales gains of 5.1 per cent, with strong growth in bar and food sales offset by some weakness in its smaller hotel business.

“The group’s net book value of its assets, including its largely freehold pub estate, was last reported at £1.4bn and a general improvement in trading conditions led Wetherspoons to reintroduce a dividend payment after an absence of five years.”

He added: “The projected yield is a modest 2 per cent, but nonetheless represents management confidence in prospects and also ran alongside a £40m share buyback programme in the period.

"In the meantime, Wetherspoons continues to rail against the authorities on a number of issues which it feels are detrimental to its business, and most vociferously on the issue of tax inequality with regard to VAT and business rates compared to the supermarkets. This has now come into particularly sharp focus given the measures introduced in the Budget.”