Wetherspoons boss bemoans tax ‘disparity’ as ‘threat’ to business
Wetherspoons chairman Tim Martin has said that tax ‘disparity’ between pubs and supermarkets is the biggest threat to business.
Wetherspoons, which has 844 pubs and hotels across the UK, has recently seen sales for the 25 weeks to 22 January falling below pre-pandemic levels.
Speaking about the recent challenges in reports following the pub company’s results, the value pub chain boss said: “The biggest threat to the hospitality industry is the vast disparity in tax treatment between pubs and restaurants and supermarkets. Supermarkets pay zero VAT in respect of food sales, whereas pubs and restaurants pay 20%. This tax benefit allows supermarkets to subsidise the selling price of beer. We estimate that supermarkets have taken about half of the pub industry’s beer volumes since Wetherspoon started trading in 1979, a process that has likely accelerated following the pandemic.”
Martin explained: “Pub industry directors have, in general, failed to campaign for tax equality, which is an important principle of taxation. Unless the industry campaigns strongly for equality, it will inevitably shrink relative to supermarkets, which will not help high streets, tourism, the economy overall, or the ancient institution of the pub.”
Martin’s statement was part of an update to the market on the value-focused chain’s performance which had recorded like-for-like sales being 0.7% lower than the corresponding period immediately before the pandemic. Performance reportedly dropped further – by 2% – in the last 12 weeks,
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “As the clouds continue to darken for the hospitality sector, it may be a case of last man standing. In the short term, the news could well get worse before it gets better.”
Russ Mould, investment director at stockbroker AJ Bell, added: “Wetherspoons has always had a model of prizing volume over margins, so when you consider how fast costs are rising it is not surprising profitability is under pressure. Barring some kind of concession by the government, all Wetherspoons can do is redouble its efforts to make its venues appealing places for people to visit, rather than just somewhere to buy relatively inexpensive drinks.”
Wetherspoons revealed this week that it had 35 pubs up for sale, and currently has a trading estate of 844. Back in September, Martin had revealed his plan was to sell 32 pubs, bemoaning rising operating costs, chiefly food and energy bills, as well as a lack of staff as the reasons behind the decision.