JD Wetherspoon chairman Tim Martin reiterated his plea for tax equality as the group announced its annual results today.
The company reported a 2% fall in profits for the year to 26 July, as it said it faced increased competition from supermarkets and restaurants. Profit before tax fell to £77.8m, down from £79.4m the previous year.
However like-for-like sales growth for the year was 3.3%, while total sales have grown by 7.4% to £1.5bn. The pub group reported that like-for-like growth had slowed to 1.4% in the six weeks to 6 September. The full year dividend was maintained at 12p.
Martin (pictured) said he was pleased with the results, but called for VAT to be equal across the food and drink industry. JD Wetherspoon said it paid £632.4m in taxes last year, or 41.8% of sales. The total amount was an increase of £32.2m from the previous year. Martin said: 'I am pleased to report a year of progress for the company, with record sales and free cash flow.
'As we have previously stated, we believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants. Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20% – and this disparity enables supermarkets to subsidise their alcoholic drink sales to the detriment of pubs and restaurants.'
Chief executive John Hutson also said the pub group – which now has 950 pubs – was facing increasing competition from casual dining restaurants. 'I’m confident in our ability to evolve our offer as time goes by and have confidence in our long term prospects. Increased competition from restaurant groups and supermarkets has had a bearing on our performance and we’d like to do better.'
Drinks sales were up by 1.2% for the year to 26 July, while food was the strongest performer, up by 7.3%. Hutson also said the group was to continue slowing its rate of new openings, as it invested in maintaining its current estate and purchasing the freehold of some of its existing locations.
The company also said the introduction of the new national living wage was unlikely to have much effect on its staffing costs. The group said it had increased its minimum hourly rate by 5% in October 2014, and by a further 8% at the end of July 2015, moves which brought it broadly in line with the government's proposed £7.20 an hour that will come into force in April 2016. Wetherspoon says it already pays around 40% of its profits (£30.7m this year) to its staff as a bonus or free shares, 80% of which is paid to staff in its pubs.