Rising costs knock froth off Wetherspoon's profits

Cask-ale-and-no-music pub chain JD Wetherspoon's has just reported a 2.7% fall in first half profits, down to £34.8m, despite revenues up 10% to £626.4m.

by Andrew Saunders
Last Updated: 13 Sep 2013
Given the parlous state of the British boozer business this is not a bad effort from Wetherspoon’s - its mullet-sporting boss Tim Martin is often derided for his shabby appearance but these results suggest that he knows his punters pretty well. 
 
In the 26 weeks to the end of January, the firm opened five new pubs taking its total to 865, with plans for a further 30 in due course. Like for like sales were up 6.9% and earnings per share rose 3% to 20.8p. 
 
But rising costs resulted in lower profits despite the strong showing on sales, and Martin once again bemoaned the enormous tax and VAT burden placed on the pub trade. Given that Wetherspoon’s coughed up more than £273.5m in taxes for the period he may have a point. That’s an awful lot of Vodka And Tonic. 
 
Martin has been campaigning for years for VAT to be levied on pubs at the same rate as it is on supermarkets. Pubs are increasingly reliant on food sales, on which they pay VAT at 20%. Supermarket food sales on the other hand, attract no VAT. 
 
That amounts to a competitive disadvantage he reckons, and he wants to see no VAT on pub food sales either. Although we can sympathise with his cause here at MT, it seems that the chances of winning such a concession from our increasingly cash-strapped and debt-laden government are about as good as finding a jukebox in a Wetherspoons pub. 
 
Coincidentally, lugubrious giant Martin has also come under attack recently, for the unlikely offence of his parents choice of forename. Author and professional splenetic Will Self penned a piece in the New Statesmen attacking Wetherspoon’s ‘shite-lite’ pubs and claiming that their - to his eyes manifold - failings were largely a result of the firm being run by a man called Tim. 
 
‘There’s a prejudice against people called Tim’ Self wrote. ‘True, it’s not on a par with racism, sexism or homophobia but there’s little doubt that your life chances will be constrained should your otherwise risk-averse parents have had the temerity to Tim you.’
 
In which case, given that Martin is worth a cool £150m or so, you have to ask how much more (if any) he might be worth if he were called Will?

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