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Thursday, October 28, 2021

Pub chain Wetherspoon reports record loss


JD Wetherspoon has reported a record annual loss after Covid lockdowns saw its pubs shut for 19 weeks.

It reported a £154.7m loss as sales fell sharply in the year to July 25, up from a £34.1m loss the previous year.

Tim Martin, the chairman of Wetherspoon, criticised the “use of lockdowns and draconian restrictions.”

Although the firm indicated that there are signs of recovery since restrictions were eased, it is having difficulty recruiting staff in some areas.

According to the pub chain, like-for-like sales, which exclude the effect of new pub openings, were only 8.7 percent lower in the last nine weeks than in the same period prior to the pandemic.

Sales at its airport sites though, have struggled, it said.

Overall, revenue from pints, meals, and soft drinks fell 38.8 percent year on year to £772.6 million.

Mr Martin, on the other hand, expressed optimism for the future in an update to investors.

“During the pandemic, pubs were at the forefront of business closures, at great cost to the industry – but even greater cost to the Treasury.”

“Despite these obstacles, Wetherspoon is cautiously optimistic about the financial year’s outcome, on the assumption that there will be no further use of lockdowns.”

Recruitment drive

As Covid-related restrictions have eased, the company has been looking to fill pub staff and manager vacancies in order to capitalise on the economic recovery.

It stated that it had received a “reasonable” number of job applications in total.

However, the company stated that it has been more difficult to attract visitors in some areas of the country, “particularly’staycation’ areas in the West Country and elsewhere.”

Its total number of employees, mostly hourly workers, increased from an average of 29,025 for the fiscal year to 42,003 in the week ending September 20, 2021.

In recent months, the hospitality industry as a whole has struggled with recruitment.

According to figures from the Office for National Statistics, the number of vacancies in the three months to August rose above one million for the first time since records began in 2001.

Many of those openings were for jobs in pubs, restaurants, and cafes that were struggling to keep up with customer demand as they returned.

According to experts, employees may be hesitant to return to work following the pandemic, as well as face child-care issues.

Recent labour shortages have also been exacerbated by the return of some workers to the European Union following the UK’s exit from the trade bloc.

The firm was also recently affected by a shortage of some beer brands caused by driver shortages due to a combination of Covid and Brexit.

Mr Martin, a prominent Brexit supporter, was chastised on social media at the time, despite the firm’s statement that it was “heartbreaking to be letting any customer down” after such a difficult time for the hospitality sector.

‘Tough year ahead’

On Friday, it urged the government to make a VAT cut for pubs and restaurants that was implemented during the Covid crisis permanent. As a result, it had reduced the prices of some items on its food menu and soft drinks.

A rise in VAT rates from 5% to 12.5% takes effect on Friday and has been criticised as “badly timed” for business.

“If the chancellor decides to make these VAT reductions permanent, the company intends to keep lower prices indefinitely,” said Wetherspoon.

“JD Wetherspoon finally began recovering from the turmoil the pandemic and Covid restrictions had put it through, only to be greeted with a supply chain hangover and staff shortages,” said Julie Palmer, a partner at Begbies Traynor.

She stated that while affordability has always been the brand’s selling point, the chain may have to reconsider that strategy as supply chain issues and rising costs take their toll.

“The board of directors may require a strong drink to warm them up for another difficult year ahead.”

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