Wetherspoon, the pub chain, has experienced a significant surge in profits, marking an eightfold increase, as it continues its recovery from the Covid-19 pandemic.
Pre-tax profits soared from £4.6 million to £36 million in the first half of the financial year, driven by higher footfall in the group’s pubs.
Despite a reduction in the number of pubs, Wetherspoon’s overall sales have been on the rise, with bar sales witnessing a notable 12% increase over the year. The top-selling items for the chain, which operates 814 pubs, were coffee and Pepsi, while food sales and slot machine revenues also saw growth.
Although sales growth has continued into the new financial year, the pace has slowed down, leading to a 6% drop in the company’s shares. Founder Tim Martin described the financial results as “good” but not “sensational,” characterising the recovery from the pandemic as a “slow three-year slog.”
However, Wetherspoon’s profit margins for the six months remained at 6.8%, below its pre-pandemic levels of 7.1%. Derren Nathan, head of equity research at Hargreaves Lansdown, acknowledged the impressive recovery but noted that margins are still thin, with limited indications of future improvement.
Wetherspoon has streamlined its operations by reducing the number of pubs from 955 to 814 in recent years, resulting in a significant increase in sales per pub. Mr. Martin emphasized the high tax burden on pubs and restaurants in the UK compared to supermarkets, advocating for tax equality to rejuvenate High Streets and town centers.
He called for a reduction in VAT rates on restaurant and food sales, similar to those in other European countries where rates typically range from 5-10%. This, he believes, would create a more favourable business environment and support the revitalisation of local economies.
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Wetherspoon profits jump as Covid recovery continues