Wetherspoons warns coronavirus crisis will push it into red despite ‘rapid acceleration’ in sales this month thanks to Eat Out To Help Out scheme
Wetherspoons warned that the coronavirus crisis will push it into the red despite a ‘rapid acceleration’ in sales this month thanks to the Eat Out To Help Out scheme.
The pub chain told investors that equivalent bar and food sales in the 44 days to August 16 were 16.9 per cent lower than in the same period last year.
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The slump came despite the opening of 844 of its 873 pubs following their closure in March as the virus lockdown was imposed.
Warning: Wetherspoons founder and chairman Tim Martin (pictured) said the loss of business means it expects to post a loss for the year to July 26.
Wetherspoons founder and chairman Tim Martin, 65, said the loss of business means it expects to post a loss for the year to July 26.
But as with other pubs and restaurants, trading at Wetherspoons improved this month after Chancellor Rishi Sunak launched the Eat Out To Help Out scheme that offers half price meals Monday to Wednesday throughout August.
‘Sales have gradually improved, with a rapid acceleration recently, largely due to subsidised food, coffee and soft drinks in the early part of the week,’ a spokesman said.
The chain has also benefited from ‘extremely flexible’ landlords, local authorities and licensing authorities, he said.
However, the firm expects a ‘period of more subdued sales’ once the Eat Out To Help Out scheme ends at the end of August. And it called for tax relief for the hospitality sector to be extended. Sunak temporarily cut VAT on spending on hotels, restaurants and tourist attractions last month to 5 per cent from 20 per cent to boost demand for services hardest hit by the Covid-19 lockdown. The Chancellor said the move – which lasts until January – would cost around £4billion.
Wetherspoons welcomed the tax cut, pointing out that pubs and restaurants had been paying 20 per cent VAT on food sales while supermarkets paid zero. Calling for the change to be extended, the spokesman added: ‘If this major step towards tax equality is maintained in the long term, it will result in a significant increase in investment and employment in the on-trade.’
And Martin said: ‘Wetherspoon had five positive tests for Covid-19 among its 43,000 staff before lockdown and has had 24 positive tests since pubs reopened on July 4.
‘Risk cannot be eliminated completely in pubs, but sensible social distancing and hygiene policies, combined with continued assistance and cooperation from the authorities, should minimise it.’
Russ Mould, investment director at AJ Bell, said: ‘It’s understandable Wetherspoons is making a big song and dance about how it is following social distancing guidelines as it wants the public to feel that its pubs are safe to visit.’