Wetherspoon faces a 'momentous challenge' to persuade pubgoers back into its bars

Tim Martin revealed that while his business had cut losses significantly, it has still not managed to return to a profit since the pandemic, and sales remain lower than in 2019.

“During lockdown, dyed-in-the-wool pub-goers, many for the first time, filled their fridges with supermarket beer – and it has proved to be a momentous challenge to persuade them to return to the more salubrious environment of the saloon bar,” he said on Friday.

Total sales rose from £773m to more than £1.7bn in the year to the end of July, the company revealed in a statement for investors and the City.

But sales were still behind the more than £1.8bn the company made in 2019.

The same story could be seen on pre-tax losses, which were cut from £167m before exceptional items last year, to just £30.4m this year. Before the pandemic the company made a profit of £132m.

It opened seven new pubs during the year, and sold, closed or ended the leases on 15 others. In July the business ran 852 pubs across its estate, it said in the statement.

“The company has improved its prospects in a number of ways in recent financial years – we own an increasing percentage of freehold properties; the balance sheet has been strengthened; interest rates have been fixed at low levels until 2031; we have a large contingent of long-serving pub staff and underlying sales are improving,” Mr Martin said.

But he warned that the business is facing increasing costs.

“However, as a result of the previously reported increases in labour and repair costs and the potentially adverse effects of rises in interest rates and energy costs on the economy, firm predictions are hard to make,” he said.

Commenting on JD Wetherspoon’s full-year results, Julie Palmer, a partner at Begbies Traynor, which has an office in Leeds, said: “It has not been an easy ride for publicans of late and Wetherspoons is no exception. Sales are down, the group has swung to a £30m loss and there’s still no dividend.

“Unlike many, Tim Martin and his team were able to fix energy costs before the price surge and the pub chain has long-term contracts with many of its suppliers behind the plethora of ales and pub classics on the menu, so cost increases could be quite subdued next year.

“Despite this, the pub company employs over 40,000 people and labour costs are only going in one direction,” Ms Palmer said on Friday.

"Throw in a record-breaking consumer confidence crisis and the future isn’t a particularly rosé one for the sector.

She added: “JD Wetherspoon’s pile it high and sell it cheap approach should be an obvious winner as consumers tighten their belts, but prices will no doubt have to rise and this will undoubtedly hit demand, however they are well placed to ride out the storm with a loyal following and the option of selling further high value sites."