JD Wetherspoon has revealed a near-eightfold uplift in pre-tax profits as price-conscious consumers flocked to drink and dine at its network of low-cost pubs.
The chain reported on Friday that pre-tax profits in the six months to the end of January had risen to £36m from £4.6m a year earlier and said it expected a “reasonable outcome” for the current financial year.
However, it added that sales growth had slowed at the start of the second half and margins were still below pre-pandemic levels, and its shares fell 7% in early trading.
Tim Martin, the chair of JD Wetherspoon, said like-for-like sales rose by almost 10% in the 26 weeks ended 28 January compared with the equivalent period of 2023, but in the seven weeks to 17 March that pace of growth had fallen to 5.8%.
The chain, which has benefited as cash-strapped consumers have sought better-value food and drinks amid the cost of living crisis, also said it was considering opening more pubs.
Martin told the Guardian he was hopeful about price rises continuing to slow, after inflation fell to 3.4% in February. “Consumers are cautious but are willing to spend and most people have jobs if they want one,” he said. “People are happy to go out for a pint if you keep the price competitive. It’s not like buying a sofa.”
He said that he intended to stick to a promise he gave on Friday in an interview on the radio station LBC not to raise the cost of a Wetherspoon’s English breakfast – which is typically priced at £5.75, according to the website – this year despite rising food costs. In February, the pub operator put up the price of its pints for the second time in six months.
Wetherspoon’s now has 814 pubs, down from 955 outlets in December 2015. The company said it had the potential for owning about 1,000 pubs in the UK and would also look at expanding some of its existing outlets by adding gardens or increasing the size of the customer areas.
Martin said Wetherspoon’s had a list of 130 towns and cities where it wanted to open a pub but this expansion would take place over a 10-year period as “we are a mature company and sites won’t come up that easily”.
About 71% of its pubs are now freehold, up from 41% in 2010, and since then it has invested £448m in acquiring the freehold “reversions” of pubs where it was previously the tenant.
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In an unconventional statement accompanying the results, Martin, who in 2021 criticised government restrictions designed to reduce the spread of Covid during the pandemic, cautioned the UK government not to repeat lockdown policies in future – despite there being no indication any are imminent given the decline in the severity of the virus and widespread uptake of vaccines.
“The company continues to be concerned about the possibility of further lockdowns and about the efficacy of the government inquiry into the pandemic which will not be concluded for several years,” Martin said. He added that he believed the inquiry time frame was “far, far too long.”
The hospitality sector has been struggling to recruit and retain staff since the pandemic. JD Wetherspoon said on Friday it had awarded £21.2m of bonuses and free shares to staff in the first-half period. The average length of service of its pub managers was now 14.6 years compared with 10 years in 2014, and the average tenure of a kitchen manager was 10.7 years compared with 6.1 years in 2014, it said.
It has not declared an interim dividend and will issue its next trading update on 8 May.