Wetherspoons is bracing for increased costs totalling £60 million, threatening the prices of pints across its establishments.
- Founder Sir Tim Martin highlights pressures from national insurance and living wage hikes on the hospitality sector.
- Recent budget measures have led to significant cost increases after a brief period of easing inflation.
- Alcohol duties have increased, yet the relief for draught drinks is not enough to counterbalance new tax pressures.
- Industry experts warn that these financial changes could impact the wider hospitality sector and pub-goers alike.
Wetherspoons is preparing for a significant rise in operational expenses, estimated at £60 million, influenced heavily by changes in national insurance contributions and the national living wage. According to Sir Tim Martin, the company’s founder, these rising costs are exerting substantial pressure on the hospitality sector.
While there was a period where cost inflation seemed to ease following its peak in 2022, the latest budget has introduced measures that sharply raise expenses again. The increase includes a 1.2 percentage point hike in employers’ national insurance contributions, raising them to 15%, along with a reduction in the NI threshold.
Alcohol duties have also been adjusted, with increases aligned with inflation. Nevertheless, draught drinks benefitted from a modest 1.75% duty reduction. However, Tim Dewey, CEO of Yorkshire brewer Timothy Taylor’s, remarked that such measures are ‘irrelevant’ in terms of offsetting the new tax demands placed on pubs.
Sales at Wetherspoons have shown resilience, with a 5.9% increase in like-for-like sales over the past 14 weeks, attributed to higher bar, food, and slot machine sales. However, there was a 2% decline in hotel room bookings. Despite rising operational costs, Wetherspoons shares saw a 2% rise in early Wednesday trading, giving some hope for the year ahead.
UKHospitality, an industry group that represents pubs, restaurants, and cafes, has estimated that changes to the national insurance will add £1 billion in tax liabilities across the sector. This has raised concerns about the broader implications for the stability of the hospitality industry and its patrons.
Wetherspoons and the broader hospitality sector face a challenging path ahead due to increased operational costs stemming from recent budget changes.