Wetherspoon drinkers pay for national living wage rise
THE boss of JD Wetherspoon has said that Chancellor Jeremy Hunt’s decision to increase the national living wage will drive up beer prices in pubs.
Sir Tim Martin said the recent lift from £10.42 to £11.44 an hour will inevitably mean higher labour costs, which in turn will be passed through to customers.
However, he said pubs would be disproportionately affected by the increase. This is because a higher proportion of the sale price in pubs covers labour costs compared with retailers.
The 9.8pc rise in the minimum wage, officially called the National Living Wage, will come into force in April.
Sir Tim said that the price of a pint in a pub typically costs about £4.50 but 30pc of this is used to cover the cost of staff.
As a result, Sir Tim predicted that beer prices in pubs would rise by about 13.5p. “The inevitable consequence is that increased labour costs raise the differential in prices between the hospitality industry and supermarkets,” Sir Tim said.
“At the same time, pubs pay far higher VAT and business rates than supermarkets, further exacerbating the price disparity. In particular, pubs and restaurants pay 20pc VAT in respect of food sales, whereas supermarkets pay almost nothing, a tax differential which is surely unfair.”
His comments came as JD Wetherspoon reported a 10.1pc jump in sales year on year over the past 25 weeks, boosted by surging demand over the festive period.
That was despite its total number of pubs falling from 826 to 814 compared with last year. It opened two new sites in London’s Euston train station and Heathrow airport, but the Hackney Gazette reported this week that the Rochester Castle, which has been a Wetherspoons since 1982 and is the company’s oldest standing pub, could be sold.
Sir Tim added: “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.”