Wetherspoon sales outperforming market
J D Wetherspoon has announced an update on current trading.
Sales across the Tim Martin-led pub group continue to recover, with the business stating it is outperforming the rest of the pub and bar market.
In the 25 weeks to 21 January 2024, like-for-like sales at Wetherspoon were 10.1% higher than the same period a year ago. Bar sales increased by 11.8%, food by 7.9% and slot/fruit machines by 10.4%. Hotel room sales increased by 3.1%.
The figures were released as part of an update on current trading, before Wetherspoon enters its close period for its interim results for the six months ending 28 January 2024, which are expected to be announced on 22 March 2024.
Like-for-like sales in the last 12 weeks were 11.1% higher than the same period a year ago, while total sales have grown by 8.4% in the year to date.
Based on figures from the Coffer CGA Business Tracker, which in December reported industry like-for-like sales of 8.8% (compared to 15.2% for Wetherspoon), the business says it has outperformed the market for 16 consecutive months.
Comment from Tim Martin
"Wetherspoon, like the hospitality industry, has seen a consistent but slow recovery, following the pandemic," says Martin. "Although inflation is, in general, reducing, labour and energy costs are far higher than pre-pandemic.
"A main issue for the pub trade is that labour costs are around 30% of sales, compared to around 10% for supermarkets. The price of a pint in a supermarket is about £1, so a 10% increase in labour costs (which are around 10p per pint) necessitates a one pence increase in the selling price to cover costs.
"However, for pubs, the average selling price of a pint is around £4.50. The labour per pint is therefore around £1.35 (30% of £4.50), necessitating a 13.5p increase in the selling price to cover extra costs. The inevitable consequence is that increased labour costs raise the differential in prices between the hospitality industry and supermarkets.
"At the same time, pubs pay far higher VAT and business rates than supermarkets, further exacerbating the price disparity. In particular, pubs and restaurants pay 20% VAT in respect of food sales, whereas supermarkets pay almost nothing, a tax differential which is surely unfair.
"Notwithstanding these issues, Wetherspoon currently expects an outcome for the financial year in line with market expectations, and will provide further updates as the year progresses."
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