Wetherspoon chairman Tim Martin 'cautiously optimistic' despite cooling sales and rising costs
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The group - one of the UK’s biggest hospitality businesses with more than 800 venues - saw like-for-like sales drop 1.1 per cent in the five weeks to November 6 when compared with pre-pandemic trading in 2019, having risen by 1.5 per cent in the previous nine weeks. Compared with a year ago, sales rose 10.1 per cent in the first nine weeks of its financial year and were 8.9 per cent higher in the past five weeks.
The firm said trading was “broadly” in line with its expectations but that October had been a slower month, adding: “Costs, especially in respect of labour, food and repairs, were substantially higher.”
Wetherspoons’ vocal founder and chairman said the firm remains “cautiously optimistic” despite the cost pressures hammering the hospitality sector. Martin said he previously set out “various threats to the hospitality industry and these continue to apply”. He added: “Those caveats aside, in the absence of further lockdowns or restrictions, the company remains cautiously optimistic about future prospects.”
Greg Johnson, an analyst at brokerage Shore Capital, said: “We remain concerned over both the near-term prospects, given its customer base, estate positioning and low-cost model, and the balance sheet (although this has been eased by today’s announcement). Longer-term however, we would expect it to emerge with greater market share.”
Pubs have been knocked by a cocktail of cost increases as inflation sends prices soaring, staff demanding higher wages and waning demand among cash-strapped pub goers. Martin warned last month that the group was facing a “momentous challenge” to persuade punters back into its bars after they got used to drinking cheaply at home during the pandemic. It came as the firm said last month that sales rose from £773 million to more than £1.7 billion in the year to the end of July. But sales were still behind the £1.8bn-plus the company generated in 2019.
Martin said last month: “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.”
The group, whose Scottish watering holes include Edinburgh’s Caley Picture House and the Guildhall & Linen Exchange in Dunfermline, opened seven pubs during the year, and sold, closed or ended the leases on 15 others. In July the business ran 852 pubs across its estate.
Adam Vettese, an analyst at social investing network eToro, said: “The big concern facing Wetherspoons, like all pubs, is that soaring costs wipe out any profits they make from increased sales. Energy bills, food prices and wages are all increasing, putting stress on the whole sector, while the cost-of-living crisis might force people to take fewer trips to the pub. There is no doubt pubs are still in a precarious position, but it is at least a positive to see one of the industry leaders demonstrating signs of recovery.”