Wetherspoon urged to put prices up as costs rise

Like-for-like sales were up 7.6 per cent in the 13 weeks to April 28, bringing comparable sales growth for the year to date to 6.8 per cent.

Growth for the company comes despite British pub operators battling rising costs from an increase in the minimum wage, higher property rents and a Brexit-spurred slide in the value of the pound.

Adding to the pressure, younger Britons are increasingly moving away from pub drinking.

City analysts have voiced their fears that growth has not translated into higher profits.

Shares in the company dipped more than 4 per cent in morning trading on Wednesday.

Profit before tax is forecast to come in at just over £100m for the year, broadly flat compared with last year’s £107.2m.

But analysts at Peel Hunt said their confidence in the company’s full-year outcome is “declining, from already low levels” due to the effect of cost pressures and low pricing on the group’s margins.

Brokers from both Peel Hunt and Liberum said the pub chain would need to increase pricing to drive profitability.

Wetherspoon’s bosses have previously said price increases were lower than inflation in the first half of the year, but that the system for price changes is random.

Asked at the MCA Pub Conference last year whether the group’s pricing is scientific, chairman Tim Martin said: “No, it’s not - I just fly by the seat of my pants.”

Wetherspoon said in November last year it would review raising pricing during the year. It has traditionally undercut many of its peers on pricing and attracted younger Britons and college students. Meanwhile, Wetherspoon’s said it had spent more than £70m on buying freeholds of pubs where it was already a tenant so far this year. More than 60 per cent of the estate is now owned by the company.

“We continue to anticipate a trading outcome for this financial year in line with our previous expectations,” Mr Martin said.

Wetherspoon, which relies heavily on alcohol sales at its restaurants has said it expected costs in the second half to remain high, after rising wages hit the budget British pub chain’s profit.

The FTSE 250 group also said it had opened three new pubs and closed seven since the start of the financial year, adding it intended to open two more pubs this year.

Greene King recently forecast annual pretax profit above analysts’ expectations as more Brits headed to its pubs.