PUBS chain boss Tim Martin hit out again yesterday at the industry’s tax disadvantage compared to supermarkets.
JD Wetherspoon suffered further increases in the cost of food and staff as well as utility bills while its total tax was £273.5 million. That was an increase of £23.4m and represents nearly 44 per cent of its sales.
“It’s not great to put our like-for-like sales up by 7 per cent and to have no profit growth to show from it, it does make me want to cry into my beer,” said the chief executive.
“If we were taxed on the same basis as supermarkets, we would have paid £40.7m less, since supermarkets pay virtually no VAT in respect of food sales.”
He said the outcome for the first half of the financial year was reasonable, given the pressure on British household budgets.
“The biggest danger to the pub industry is the VAT disparity between supermarkets and pubs and the continuing imposition of stealth taxes, such as the late-night levy, and the increase in fruit/slot machine taxes,” Martin said.
He added that be believed there was “an overwhelmingly strong case for tax parity” between supermarkets and pubs because the former used their lower taxes to sell alcohol far more cheaply.
His comments came amid the reignited debate this week about minimum alcohol pricing, with the UK government having done a U-turn on introducing legislation to enforce it.
The Wetherspoon boss said that if the tax system was used to encourage – rather than discourage – consumption in public houses it would greatly increase the average price per unit of alcohol paid by consumers.
Revenues at the 860-plus Wetherspoon’s estate rose 10 per cent to £626.4 million for the six months to 27 January, with same-floorspace sales up a shade under 7 per cent.
But underlying profits at the group, whose 40-odd Scottish outlets include Edinburgh’s Playfair and the Corn Exchange in Perth, still fell 2.7 per cent to £34.8m.
That compared with a profit of £35.8m in the same period a year ago. Operating profits at the chain fell £1m, or 2 per cent, to £52.1m.
Wetherspoon, which employs 30,000 staff, said it was stepping up its pub-opening programme in the second half. In the first six months of its financial year it opened five pubs, but said it expected to open a total of 30 new outlets over the current financial year.
Martin has said he is looking at the possibility of his company opening outlets at motorway service stations. It already has a presence at UK airports, including The Turnhouse at Edinburgh airport.
The results were reasonably well-received by the City, particularly in the light of the second wettest UK summer on record which has depressed takings throughout the pubs industry.
The dividend was pegged at 4p. Wetherspoon’s shares closed down 5.5p at 515.5p.
Profit margins in the period fell 1 per cent year-on-year due to the rising costbase.
Wetherspoon disclosed that like-for-like sales growth accelerated to 7.3 per cent in the six weeks to 10 March, although it said taxation and other costs were expected to continue to rise.