Pub goers return after Wetherspoons looks to drown record loss sorrows
Pubs giant JD Wetherspoon has recorded its biggest loss on record as the business was battered by lockdown restrictions, but its outspoken founder remains upbeat.
The chain, which is one of the UK’s biggest hospitality businesses with hundreds of pubs, has only seen losses in three of its 37 years - in 1984, 2020 and 2021. But the 12 months to July 25 were its worst to date, sinking to a pre-tax loss of £154.7 million, compared with a deficit of £34.1m a year earlier. Sales fell from £1.26 billion to £772.6m.
Tim Martin, the group’s vocal founder and chairman, said he remained hopeful for the future and customers were starting to return since lockdown restrictions eased during the summer.
However, filling jobs was becoming difficult in some areas - particularly "staycation" locations in different parts of the country.
He also attacked the UK government for its handling of the sector during the pandemic and claimed the use of lockdown restrictions were "a threat to civil society and democracy".
Hospitality has been one of the hardest-hit sectors from the pandemic, facing lengthy closures and rule changes, although they have also been entitled to government support in furlough scheme payments, VAT holidays and local authority grants. They are now facing difficulties with supply chain shortages.
Over the past nine weeks, Wetherspoon’s sales were just 8.7 per cent below the levels in the same period pre-pandemic. This has improved further still, with sales down just 6.4 per cent in the past four weeks.
However, airport pubs remain subdued - down 47.3 per cent - pushing the overall figures lower as a result.
Martin said: "During the pandemic, the pressure on pub managers and staff has been particularly acute, with a number of nationwide and regional pub closures and reopenings, often with very little warning, each of which resulted in different regulations.
"In spite of these obstacles, Wetherspoon is cautiously optimistic about the outcome for the financial year, on the basis that there is no further resort to lockdowns or onerous restrictions."
The high-profile Brexit supporter added: "The biggest threat to the pub industry, and also, inter alia, to restaurants, theatres, cinemas, airlines and travel companies, relates to the precedent set by the government for the use of lockdowns and draconian restrictions, imposed under emergency powers.
"This threat, which is also a threat to civil society and democracy, has been regularly articulated by many commentators, including the former Supreme Court judge Lord Sumption."
Greg Johnson, an analyst at brokerage Shore Capital, said: “Current trading has been below peers, albeit application of the VAT benefit is likely to account for part of this, and the statement points to being ‘optimistic’ for the outturn of the current financial year, assuming no further lockdowns.
“With its low margin structure, we see the group arguably one of the most exposed to ongoing cost pressures in the system, notably labour, whilst its customer base has traditionally proven more price sensitive than the broader market.
“A full recovery in sales and margins could prove more difficult for JD than other peers.”