Wetherspoons squeezes out small profits as it sells pubs countrywide

Liverpool: Mass brawl breaks out outside Wetherspoon pub

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JD Wetherspoon has been closing dozens of its pubs across the UK in the past few months in a bid to cut back on spiralling operating costs. The company’s six-month financial statement has now shown the policy could well have worked, as the chain was able to eke out slim profits in its latest results. While supply and staffing issues are now resolved, persistent inflation and a spike in energy bills mean hospitality is not yet out of the woods.

The coronavirus pandemic and lockdowns devastated the hospitality industry. Revenues in April 2020 were roughly eight times below those of 2019.

Just as the food and beverage sector found its feet in late 2021, inflation began spiralling at an alarming rate. The record rates hit throughout 2022 also had a particularly harsh impact.

Over the 12 months to February 2023, prices in restaurants and hotels leapt by 12.1 percent – the steepest hike since 1991 – while food and beverage price inflation surged 18.2 percent, a rate unparalleled for more than 45 years. It was a strong deterrent to not spend money for those already struggling with cost of living costs.

Energy bills have been the main driver of inflation throughout the year. With electricity costs up 66.7 percent and gas up 129.4 percent, many watering holes and eateries on the margin of profitability in the best of times saw operating costs become critical this winter.

JD Wetherspoon is one of the biggest players in the market – with more than 800 pubs under its name, the bricks and mortar of which are worth just under £2billion, and roughly 43,000 employees – but it hasn’t been spared.

READ MORE: Popular chain puts 61 pubs up for sale – full list of locations

In the opening statement to Wetherspoon’s 2023 interim report released on Friday, chairman Tim Martin acknowledged as much, saying: “Inflationary pressures in the pub industry, as many companies have said, have been ferocious, particularly in respect of energy, food and labour.

The staple pub chain – renowned for its affordable pints and high street ubiquity – announced it planned to sell off 35 of its free houses last September. As many as 22 are now confirmed to have closed down, the most recent of which last Saturday, March 18.

The sale of company assets appears to have balanced the books for now – Spoons reporting just under £1.3million in profit after tax for the 6-month period to the end of January, having suffered an £25million loss this time last year.

Despite this, the underlying business is still struggling. Like-for-like sales were found to be down 0.6 percent from the same span in 2020. 

Check our map below to see how many Wetherspoons pubs have closed near you.

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Among the announcements in the Spring Budget 2023 was an extension of the Energy Price Guarantee (EPG) scheme, capping household bills for an extra three months. Chancellor Jeremy Hunt made no mention of prolonging support for businesses.

British Beer & Pub Association chief executive Emma McClarkin said this had a direct impact on the ability of boozers to “keep their lights on and doors open.”

Recent analysis by the Liberal Democrats found hospitality firms in London are staring down an almost £4,500 rise in annual energy bills once Government support is scaled back come April. 

In Wetherspoons’ report, Mr Martin said “supply or delivery issues have largely disappeared, for now” and despite a competitive labour market the company had “a full complement of staff”. He added that the return to profitability had also left him “cautiously optimistic about further progress in the current financial year and in the years ahead”.

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