One of the UK’s most distinguished pub chain chiefs has issued a rallying cry to the hospitality trade, saying a tax disparity is the largest menace to its success.
JD Wetherspoon’s chairman, Tim Martin, has long-complained about supermarkets’ therapy relating to the fee of Value Added Tax (VAT), saying it provides them an unfair benefit – significantly at a time when the hospitality sector is struggling to recuperate from the COVID pandemic due to the price of dwelling disaster.
“Supermarkets pay zero VAT in respect of food sales, whereas pubs and restaurants pay 20%. This tax benefit allows supermarkets to subsidise the selling price of beer”, he wrote.
“We estimate that supermarkets have taken about half of the pub industry’s beer volumes since Wetherspoon started trading in 1979, a process that has likely accelerated following the pandemic.”
He complained: “Pub trade administrators have, typically, did not marketing campaign for tax equality, which is a vital precept of taxation.
“Unless the industry campaigns strongly for equality, it will inevitably shrink relative to supermarkets, which will not help high streets, tourism, the economy overall, or the ancient institution of the pub.”
He made his remarks in opposition to a backdrop of sturdy buying and selling for main grocery store chains, which benefited massively from lockdowns and different pandemic restrictions as pubs and eating places have been pressured to close their doorways.
Trading updates since Christmas have largely proven continued gross sales progress as customers eat and drink extra at house due to the squeeze on their funds from energy-led inflation.
Mr Martin’s plea was contained in an replace to the market on the value-focused chain’s efficiency.
He stated he was “cautiously optimistic” concerning the present monetary yr regardless of its gross sales for the 25 weeks to 22 January falling beneath pre-pandemic ranges.
Like-for-like gross sales have been 0.7% decrease than the corresponding interval instantly earlier than COVID.
Performance dropped additional – by 2% – within the final 12 weeks, underscoring the hit to buying and selling in the course of the historically sturdy festive season.
Rivals have blamed the surge in dwelling prices and disruption brought on by rail strikes.
Wetherspoon’s, which has greater than 900 pubs and lodges, stated nonetheless that like-for-like gross sales have been 13.1% greater for the 25 weeks from a yr earlier.
Shares have been greater than 2% down in early offers.
Derren Nathan, head of fairness analysis at Hargreaves Lansdown, stated: “Wetherspoon’s value offer is helping it to outperform its peers, and the recent steps it’s taken to shore up the balance sheet leave it well placed to ride out the storm.
“As the clouds proceed to darken for the hospitality sector, it might be a case of final man standing.
“Wetherspoon will in our opinion no doubt survive, and indeed prosper with increased market share for when the cycle turns. But in the short term, the news could well get worse before it gets better.”
Source: information.sky.com”