Pub chain Wetherspoon reports record loss

Business

It posted a £154.7m loss as sales fell sharply in the year to 25 July, after a £34.1m loss a year earlier.

Wetherspoon’s chairman Tim Martin criticised the “use of lockdowns and draconian restrictions”.

Although the firm suggested that there were signs of recovery since restrictions eased, it is struggling to recruit staff in some areas.

The pub chain said that like-for-like sales, which strip out the effect of new pub openings, were just 8.7% lower in the last nine weeks than in the same period before the pandemic.

Sales at its airport sites though, have struggled, it said.

Overall, revenues generated through pints, meals and soft drinks fell by 38.8% from a year earlier to £772.6m.

But in an update to investors, Mr Martin said that he felt hopeful for the future.

“Pubs have been at the forefront of business closures during the pandemic, at great cost to the industry – but at even greater cost to the Treasury.

“In spite of these obstacles, Wetherspoon is cautiously optimistic about the outcome for the financial year, on the basis that there is no further resort to lockdowns”.

Recruitment drive
As Covid-related restrictions have eased, the firm has been looking to fill vacancies for pub staff and managers and make the most of the economic recovery.

It said overall it had received a “reasonable” number of applications for jobs.

But in some areas of the country, “especially ‘staycation’ areas in the West Country and elsewhere”, it has been harder to draw people in, the company said.

Its total number of employees, who are mostly staff paid per hour, increased from an average of 29,025 for the financial year to 42,003 in the week to 20 September 2021.

The wider hospitality industry has been struggling with recruitment in recent months.

According to figures from the Office for National Statistics, the number of vacancies in the three months to August rose above one million for the first time since records began in 2001.

Many of those vacancies were for jobs in pubs, restaurants and cafes trying to keep up with demand as customers return.

Experts have said that staff may feel cautious about returning to work after the pandemic, as well as facing child-care issues.

Recent labour shortages have also been exacerbated by some workers returning to the European Union after the UK’s exit from the trade bloc.

The firm was also recently affected by a shortage of some beer brands caused by driver shortages due to a combination of Covid and Brexit.

At the time, Mr Martin, a prominent Brexit supporter, was criticised on social media, although the firm said it was “heart-breaking to be letting any customer down” after such a difficult time for the hospitality sector.

‘Tough year ahead’
On Friday, it called on government to make a VAT cut that was introduced for pubs and restaurants during the Covid crisis permanent. It had lowered the prices of some items on its food menu and soft drinks as a result.

A rise in VAT rates from 5% to 12.5% takes effect on Friday and has been criticised as “badly timed” for business.

“If the chancellor decides to make these VAT reductions permanent, the company intends to retain lower prices indefinitely,” Wetherspoon said.

Julie Palmer, a partner at Begbies Traynor, said: “JD Wetherspoon finally began recovering from the turmoil the pandemic and Covid restrictions had put it through, to be greeted with a supply chain hangover and staff shortages.”

She pointed out that affordability had always been the brand’s selling point, but that the chain might have to rethink that strategy as supply chain issues and rising costs hit.

“The board may need a strong drink to warm them up for another tough year ahead.”