Yahoo Finance Wetherspoon blames staff costs for raising price of beer
Wetherspoon (JDW.L) reported higher sales in the last 25 weeks, with the group’s boss claiming that rising wages are forcing pubs to put up prices more than supermarkets.
In its trading update, the FTSE 250 company said like-for-like sales in the 25 weeks to January 21 rose 10.1% on an annual basis. Bar sales increased by 11.8%, food by 7.9% and slot/fruit machines 10.4%. Hotel room sales were up 3.1%.
The group’s chairman Tim Martin said pubs were being forced to increase the price of a pint, which typically costs about £4.50, by 13.5p to cover extra costs of staff, which are covered by about 30% of sales.
He said: “The price of a pint in a supermarket is about £1, so a 10% in labour costs (which are around 10 pence per pint) necessitates a one pence increase in the selling price to cover costs.
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“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 13.5 pence increase in the selling price to cover extra costs.”
He added: “The inevitable consequence is that increased labour costs raise the differential in prices between the hospitality industry and supermarkets”
The minimum wage, officially called the National Living Wage, will increase to £11.44 per hour for workers over 21 from April.
The pub chain said it had closed five pubs, with another eight leased pubs “either been returned to the landlord or sublet”. But it did open two new pubs, at London’s Heathrow airport and at London Euston railway station.
The group, which owns and operates pubs across the UK and Ireland currently has a trading estate of 814 pubs.
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Despite the lift in sales, Martin warned the sector is still struggling from high energy and labour costs.
He said: “Wetherspoon, like the hospitality industry, has seen a consistent but slow recovery, following the pandemic.
“Although inflation is, in general, reducing, labour and energy costs are far higher than pre-pandemic.”
Watch: National living wage increasing to £11.44 per hour from April – a £1.02 rise
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