Wetherspoon remains cautious despite Christmas cheer

An improved sales performance provided some Christmas cheer for pub chain JD Wetherspoon but its chairman warned today that its expansion plans may be scaled back in the face of more tax hikes.

The chain, which operates some 850 pubs, is on track to open 50 sites in the year to July but future openings may slow drastically if the Chancellor presses ahead with planned increases in duty.

Chairman Tim Martin has called on George Osborne to scrap the rises in alcohol duty, which have been going up above the rate of inflation in recent years and will wait for the Chancellor's Budget speech before deciding whether the current rate of expansion can continue.

The chain said today that like-for-like sales in the 12 weeks to January 15 increased 3.6%, which was up from 1.1% in the previous quarter.

However, the most recent figures were flattered by comparisons with a weaker performance in the previous December when Arctic blizzards kept people at home.

The group said its profit margins fell in the second quarter of its financial year as it struggled to pass on the rising cost of VAT, alcohol duty, and higher food and drink costs to cash-strapped consumers.

Mr Martin said: "If taxes continue to rise, we will have to look closely at our expansion plans.

"We are already paying too much duty and it's not a viable proposition for the Government to punish pubs in this way.

"It's driving people away from pubs and it's bad for jobs.

"You just have to drive around Wolverhampton, Stoke or the suburbs of Birmingham to see the devastation wrought on the sector as a whole."

Mr Martin, who started the chain in 1979, also pointed out that supermarkets have an unfair advantage over pubs because they do not to have to pay VAT on food sales, which went up last year to 20%.

He claimed this allows them to subsidise beer and steal sales from the pub industry.

Pubs have been closing at a rate of about 14 a week between December 2010 and June, according to figures from campaign group Camra.

The sector has suffered in the wake of the smoking ban and as the squeeze in consumer spending sees more people buy cheap drink from supermarkets.

Its outspoken chairman said Wetherspoon has been "the pre-eminent pub company" in recent years, helped by its aim of providing "reasonable" prices.

Wetherspoon has been opening about 50 pubs a year recently and created some 2,800 jobs in its last financial year.

Mr Martin said the combination of tax rises and increases from breweries meant the price of a pint in Wetherspoon pubs rose 4% or 5% to an average of about £2.40 over the past year.

But he said another rise in duty would help push prices across the industry up by 10p to 15p this year, although it was too early to say how much prices in Wetherspoon would rise.

PA