Wetherspoons warns against increase in food prices
JD Wetherspoons (LON:JDW) confirmed on Wednesday that sales at its pubs haven’t risen as they would have hoped even though it has been able to reopen the majority of its locations.
Wetherspoons said that out of its 860 pubs, 850 were open, with the closed pubs being located by airports.
Between April 12 and May 16 bar and food sales dropped by 49% as guests were free to dine outside.
The pub company said its sales were down by 14.6% between May 17 and July 4, the period when the government said pubs could reopen for indoor dining.
Wetherspoons also warned that food prices would naturally rise towards the end of the year as the reduction in VAT rates will finish.
In an effort to stimulate the industry, hospitality firms were given a 5% rate cut to help them along during the pandemic-induced crisis.
As of September, the rate will rise to 12.5%, ahead of its return to 20% in April 2022.
Tim Martin, the chairman of Wetherspoon, said: “The company continues to expect to make a loss for the year ending 25 July 2021.”
“While pub operators across the UK have cheered on the Euro football championship as it has boosted sales, Wetherspoon is paying the price for not having televisions in its boozers,” said Russ Mould, investment director at AJ Bell.
“This disadvantage is a complete turnaround from last summer when its pubs had a strong advantage in that they were often bigger than rival outlets in the same area and were better placed to accommodate social distancing measures.”
“Wetherspoon also had an established app which meant it could instantly switch to mobile-based ordering from the table, unlike some rivals who had to ship in the technology.”
“As it stands, Wetherspoon is on track to make a loss for the year to 25 July. Apart from having some TVs in its pubs for the football, there was nothing else it could have really done to boost trade beyond what’s already in place, given how disruptive the year has been.”