JD Wetherspoon revealed a nearly eight-fold increase in pre-tax profits as price-conscious consumers flocked to drink and dine at JD Wetherspoon's budget pub chain.
On Friday, the chain said pre-tax profits for the six months to the end of January rose to £36m from £4.6m a year earlier and said it expected a “reasonable result” for the current financial year.
But he added that sales growth slowed early in the second half and margins remained below pre-pandemic levels, with the company's shares down 7% in early trading.
Tim Martin, chief executive of JD Wetherspoon, said comparable sales were up almost 10% in the 26 weeks ended January 28 compared with the comparable period in 2023, but in the seven weeks to March 17 the growth rate slowed to 5.8%.
The chain, which has benefited as cash-strapped consumers look for better quality food and drink amid the cost of living crisis, also said it was considering opening more pubs.
Martin told the Guardian he hoped price increases would continue to slow after inflation fell to 3.4% in February. “Consumers are cautious, but they are willing to spend, and most people have jobs if they want them,” he said. “People are willing to go out for a beer if the price is competitive. It's not like buying a sofa.”
He said he intended to keep a promise made on Friday in an interview with radio station LBC and not to increase the price of a Wetherspoon English breakfast this year – which usually costs £5.75, according to the website – despite the rise in food costs. In February, the pub operator raised the price of its pints for the second time in six months.
Wetherspoon now has 814 pubs, up from 955 in December 2015. The company has said it has the potential to have around 1,000 pubs in the UK and is also considering expanding some existing pubs by adding gardens or increasing the size of customer group areas.
Martin told the Guardian that Wetherspoons has a list of 130 cities and towns where it wants to open a pub, but that expansion will take place over a 10-year period because “we are a mature company and sites won't come easily.” .
Some 71% of pubs are now privately owned, up from 41% in 2010, and it has since invested £448m in taking over freehold pubs where it was previously a tenant.
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In an unconventional statement accompanying the results, Martin, who in 2021 criticized government restrictions aimed at curbing the spread of Covid during the pandemic, warned the UK government not to repeat lockdown policies in the future – even though there is no indication that any restrictions will were going to happen inevitably, given the decline in the severity of the virus and the widespread use of vaccines.
“The company continues to raise concerns about the potential for further lockdowns and the effectiveness of the government's investigation into the pandemic, which will not be completed for several years,” Martin said. He told the Guardian he thought the deadline for the investigation was “far too long.”
Since the pandemic, the hospitality industry has struggled to recruit and retain staff. JD Wetherspoon announced on Friday that it had awarded bonuses and free shares worth £21.2 million to employees in the first half of the year. The average seniority of pub managers is now 14.6 years, compared to 10 years in 2014, and the average seniority of a kitchen manager is 10.7 years, compared to 6.1 years in 2014.
It has not declared an interim dividend and will publish the next update on May 8.
