Wetherspoons aren't happy about the living wage
The boss of the Wetherspoons pubs is not happy about having to pay his staff more money. Tim Martin, the chairman of the budget pubs, has reported that the chain has seen a 25% fall in profits, and this National Living Wage isn't helping.
Martin says that pubs are under too much unnecessary pressure, thanks in part, to the VAT that pubs are charged, compared to supermarkets.
Of course, the National Living Wage is a hot topic at the moment, with Costa and Next giving everyone the doe-eyes, talking about how much it will hamper their profits. Tim Martin is echoing that, reporting a drop in pretax profits to £58.7m for the year to 26 July.
Now, looking at the numbers, Wetherspoons have seen a rise in bar and food sales, with revenue from their gamblers down. The biggest loss actually came from one-off items, which included an £11.2m write-down on the value of pubs that are under-performing. When you lose all this lot, profits were actually down 2%, thanks in part to higher wages.
That's not to say that Martin doesn't have a point about the disparity between the VAT paid by pubs and supermarkets. Pubs are charged 20% VAT on food sales, while supermarkets are charged nothing, which means the shops can subsidise their booze. Supermarkets then, will be better equipped to deal with the National Living Wage better than pubs will, in his eyes.
He said: "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. This financial pressure will be felt most strongly in areas which are less affluent, since the price differential in those areas between pubs and supermarkets is far more important to customers."
"It is certain that high streets in less affluent areas, which already suffer from serious problems of empty shops and dereliction, will suffer further if pubs and other labour-intensive businesses close."