Wetherspoons drinkers brace for price rises after budget

The boss of JD Wetherspoons has said he is confident about a “reasonable outcome” for the year despite rising costs as the pub group reported a strong start to the new financial year.
Wetherspoons, or Spoons as many of its regulars call it, reported a 5.9 per cent increase in like-for-like sales for the 14 weeks to November 3, keeping its performance above that of the sector for a 25th consecutive month.
Like-for-like drink sales and food sales both rose by 5.7 per cent, while fruit machine sales, a comparatively small part of the business, were up 13.5 per cent. Income from its hotel rooms dipped 2 per cent. The disposal of a small number of pubs meant that total sales for the period grew 4.6 per cent.
Sir Tim Martin, its founder and chairman, said: “The company achieved record sales in the 14-week period and staff retention continues to be at high levels.”
“The company is confident of a reasonable outcome for the year,” he added, despite the extent of increased costs due to the budget making it more challenging to forecast the group’s performance.
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Martin founded the business in 1979 on the site of a former betting shop in Muswell Hill, north London. It had 44 pubs at its flotation in 1992 and the portfolio has since grown to 797 sites around the country, from Penzance to Inverness.
So far this year it has opened two new pubs, in Buckinghamshire and Waterloo station, and aims to open nine in total by the end of the financial year, including at Manchester Airport.
Roberta Ciaccia, an analyst at Investec, said: “Given the limited extent of price increases implemented over the past year, we can comfortably assume that most of the performance was driven by volume.”
She believes that Wetherspoons could “easily implement some price increases, given its price differential with peers”. Greg Johnson, an analyst at Shore Capital, agreed that the business “probably has the most room to move on price.”
Alongside its solid trading update, Martin gave warning about the possibility of having to increase prices after he said that the company’s group’s tax and business costs are expected to rise by about £60 million a year because of these measures, including an estimated 67 per cent increase in national insurance contributions.
The shares rose 22p, or 3.7 per cent, to 620p in in afternoon trading.
In its most recent financial year, the group posted revenues of £2.04 billion and an adjusted pre-tax profit of £73.9 million, which prompted it to reinstate a dividend for the first time in five years.