He has also accused the government of deciding new living wage rules “on a whim” and for “political reasons”, which he said puts pubs at a disadvantage against supermarkets because pub wages account for a higher proportion of sales, meaning wages are higher.
But a Wetherspoon spokesperson told Recruiter in a statement that while the NLW would hit the group’s expansion plans, hiring is unlikely to be affected.
UK-based pub chain JD Wetherspoon is set to double the number of pubs in Ireland over the next 18 months, according to its founder Tim Martin.
“So initially around 200 fewer jobs in the next 12 months in new pubs, but the reality is that these will likely be replaced by new jobs in existing pubs, so [we] don’t see any real change”.
“By pushing up the cost of wages by a large factor, the government is inevitably putting financial pressure on pubs, many of which have already closed”, he said.
But, excluding these, profits still fell 2 per cent to £77.8m, partly due to higher wage costs, it said.
He said the new living wage would particularly hit pubs in poorer areas because that was where the Value-Added Tax differential between them and supermarkets selling cheaper, food-subsidised beer was already having the greatest impact. Martin also slammed taxation for pubs and restaurants, arguing the 20% VAT rate hospitality companies have to pay, against a close to zero rate for supermarkets, gave the latter the opportunity to cover tax costs over alcoholic beverages. And it’s already increased its minimum wage by 5% last October, and by a further 8% in July.
J D Wetherspoon reported that, in the six weeks to 6 September 2015, like-for-like sales increased by 1.4%, with total sales increasing by 5.2%.
The group, which in March cut breakfast and coffee prices with the aim of tripling sales by this time next year, said its operating margin for the year to July 26th was 7.4 per cent, down from 8.3 per cent in 2014 and from as much as 10.2 per cent in 2009. Typically, 85p of a £3.50 pint bought in a pub goes on staff wages.
Looking forward, the Group said, it continues to anticipate trading performance in the current financial year to be similar to, or slightly above, that achieved in the previous financial year.
The other significant driver to the £20m fall in full-year profits related to provisions for onerous leases on under-performing pubs whereby future trading profits are not expected to cover the rent. “All the major banks and many supermarket and pub companies have recently suffered colossal business and financial problems, in spite of, or perhaps because of, their adherence to governance guidelines”, he added.