Wetherspoons: ‘Cost of burger and pint will have to rise’ amid £60 million staffing cost hit

JD Wetherspoon’s founder and chairman Sir Tim Martin has warned that the pub giant will come under pressure from surging labour costs and tax disparities with retail rivals over the coming year.

However, the business, which runs almost 800 pubs across the UK, including the likes of the Caley Picture House in Edinburgh and Dunfermline’s Guildhall & Linen Exchange, revealed a 5 per cent hike in sales in recent weeks and pointed towards positive trading for the remainder of the year.

Unveiling the latest results, chairman Martin - who founded the chain in the late 1970s with a single pub in Muswell Hill, London, naming the business after one of his teachers - said the group was on track for a “reasonable” performance over 2025 despite pressures on consumer budgets.

JD Wetherspoon, frequently called Spoons, runs some 800 pubs across the UK, including Dunfermline’s Guildhall & Linen Exchange within its Scottish portfolio. Picture: Scott Reid

The group - often referred to as Spoons - has said it expects to face a £60 million hit from higher labour costs from April, when increases in the national minimum wage and employer national insurance contributions come into force. Martin, who has been vocal on a range of matters including Brexit and Covid lockdowns, said the cost increase will amount to “approximately £1,500 per pub, per week”.

He added: “Since labour costs are around 35 per cent of the pub industry’s sales, compared to around 11 per cent for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade.

“The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs will weigh heavily on the pub industry.”

Analysts have predicted that the group may have to increase food and beer prices further in order to mitigate higher costs. One observer suggested the “cost of a burger and pint will have to rise” to help offset cost pressures.

It came as Wetherspoons revealed that profit before tax came in at £32.9m for the 26 weeks ended January 26 - its first half. That was down 8.6 per cent on the year before. A half-year dividend of 4p per share was declared, where none was paid a year earlier. The firm noted that in the seven weeks to March 16, like-for-like sales rose 5 per cent.

Garry White, chief investment commentator at Charles Stanley, said: “​While it wasn’t exactly trebles all round for management of pubs operator JD Wetherspoon, it released a reassuring set of interim numbers.

“However, as Chairman Tim Martin was at pains to point out, increases in national insurance and labour rates from the start of the tax year will result in tax increases for the business of approximately £60m a year. Is the pub’s recovery, which continued in 2024, now at risk?”

Charlie Huggins, manager of the “Quality Shares Portfolio” at Wealth Club, added: “The extent of cost increases is going to get much worse from April 1. Labour costs will rise by £60m which is frankly crippling and will likely eat further into profit margins going forwards. The cost of a burger and pint will have to rise to help mitigate this pressure, which hardly encourages more punters through the door.”

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