Wetherspoons to hike meal prices after hitting out at 'Monty Python' tax rules

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Pubs giant JD Wetherspoon has hit out at the UK government for “Monty Python” VAT rules which it said will bolster big supermarkets instead of the hospitality sector and lead to higher meal prices.

The chain, which has almost 900 pubs, said it will have to increase the price of its meals when a recent reduction in the VAT on its food is phased out.

Hot food served in pubs and restaurants typically has a VAT rate of 20 per cent, although this has been slashed to 5 per cent during the pandemic.

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Wetherspoons said plans to return VAT for hospitality food to previous levels shows “unfairness” compared with retail, where there is largely no VAT.

The JD Wetherpoon Scottish estate includes the Caley Picture House on Lothian Road in the centre of Edinburgh.The JD Wetherpoon Scottish estate includes the Caley Picture House on Lothian Road in the centre of Edinburgh.
The JD Wetherpoon Scottish estate includes the Caley Picture House on Lothian Road in the centre of Edinburgh.

Releasing a trading update, the firm said: “The interim rise to VAT of 12.5 per cent, in September 2021, will result in Wetherspoon having to increase food prices by around 40 pence per meal.

“The VAT rise will make the entire hospitality industry less competitive vis a vis powerful supermarkets.

“For many years, UK governments have therefore behaved like Monty Python’s Dennis Moore – who robbed the poor (in this case pubs and restaurants) to help the rich (supermarkets).

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“Treating the same product, food, the same way for tax purposes makes economic sense.”

The criticism came as the group said it expects to tumble to a loss for the current financial year after sales since reopening trailed pre-pandemic levels.

It has now reopened 850 of its estate of 860 sites, with the remaining outlets mainly at airports.

Like-for-like sales from May 17, when hospitality venues were able to reopen indoors, to July 4 declined by 14.6 per cent against the same period last year.

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The chain told shareholders that this sales decline has accelerated while the Euro 2020 tournament has been on.

Wetherspoons said sales since June 10, when the football tournament started, have fallen by more than a fifth, with the group’s pubs not televising games apart from a limited number of exceptions.

Like-for-like bar and food sales from April 12 to May 17, when sites were only able to reopen outside, declined by 49 per cent against the same period in 2019.

The firm said it had opened two new pubs in the past six months and now has an investment pipeline which includes 18 new sites and 57 extensions and upgrades. It also reiterated its intention to create as many as 20,000 jobs over the next decade.

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Chairman and founder Tim Martin said: “In a trading update of January 19, the company’s principal ‘scenario’ estimated sales in the financial year starting July 26 to be in line with financial year 2019, which remains our current best estimate, on the basis that restrictions are ended, as the government currently intends.”

Richard Hunter, head of markets at Interactive Investor, noted: “Wetherspoon’s tentative sales recovery has been slightly derailed by its decision to maintain its historic stance on, for the most part, refusing to televise football matches.

“This has led to some investors questioning the wisdom of its position, as the travel of direction had been improving.”

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Wetherspoon pub growth plans could create 20,000 jobs over next decade

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