Wetherspoons aren't happy about the living wage

11 September 2015

pint of beer 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."

TOPICS:   Tax

11 comments

  • Colin
    Used to work at Spoons. Every year they used to give each staff member a £4 bottle of wine at Xmas. Decided to stop doing it to save money. Says a lot about them. When I left it took me almost 3 months and dozens of phone calls to get my final paycheck. Tim Martin really cares about his employees.
  • Raggedy
    A drop in profits to £58 million?!? Tim Martin, you're a disgrace to humanity. Pay the "Living" wage and stop running your life through greed.
  • OlPeculier
    This continued thig about supermarkets not paying VAT is getting silly. The reason is, you've got to take the stuff home and COOK IT YOURSELF. VAT is charged on "luxury items" - if you can afford to eat out, then you pay VAT. They still have to pay VAT on non-essentials, such as booze or if you choose to, a TV from Tesco...
  • TitMouse
    Rich knob worried about being slightly less rich and fairer to employees shocker!
  • Father J.
    "Tim Martin really cares about his employees." and even less about his ex-employees by the sounds of it.
  • thefunboi
    Stop charging pubs VAT, and then restaurants will start complaining about the same for food and wine... Jesus, as if £58million isnt enough profit. This guy is only ever in the news moaning about stuff, when all hes going to do is pass on the extra wage cost in the price of the pint, just like every other business will do who will also have to pay the living wage.
  • thecresta
    So because supermarkets get away with paying less VAT than pubs, Tim should be allowed to pay his staff less than the living wage as means of compensation?
  • you
    Im guessing that no-one posting above actually owns or manages a business which has the policy "we've made enough profit this year"
  • Father J.
    @you: You are David Cameron and I claim my eight free cans of Ace lager.
  • Gas M.
    do supermarkets Pay the living wage?
  • David F.
    oh the irony. We'll have to put prices up if we have to increase wages to to cover the living wage. which in turn will increase the cost of living and subsequently increase the living wage.

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