Pub chain JD Wetherspoon says it has invested heavily in marketing, alongside labour and repairs, following the lifting of Covid-19 restrictions in order to “strengthen” its position for the financial year beginning 1 August 2022.
It comes as the business warns it will report an annual loss of £30m for the year to the end of July, the third year in a row it has made a loss as sales fail to catch up with pre-Covid levels.
The company says its like-for-like sales for the first 11 weeks of its fourth quarter were 0.4% lower than the same period in 2019. Draft ale and lager sales, a main revenue contributor, dropped by 8% over the quarter.
Marketing costs for the company have “increased substantially” it says, following changes to restrictions such as implementing new menus following government calorie intake guidelines.
Inflation, mainly a result of the ‘money printing’ which was activated by governments and central banks to finance lockdowns, has proved to be far higher and more intractable than anyone anticipated.
Tim Martin, JD Wetherspoon
Wetherspoon says a combination of rising costs, such as fuel, as well as staff expenses and falling sales, have contributed to the expected loss of £30m.
The company says that “contrary to expectations” sales in major city centres, not including London, have been stronger than in suburban locations or smaller towns.
“Inflation, mainly a result of the ‘money printing’ which was activated by governments and central banks to finance lockdowns, has proved to be far higher and more intractable than anyone anticipated,” says JD Wetherspoon chairman Tim Martin.
He blames the “fear factor” used by governments to encourage compliance with lockdowns and restrictions as having “lingering after effects”, with many people remaining cautious about going out as they did pre-Covid.
“Wetherspoon has tried to take a long-term approach to these issues, investing heavily in the workforce, in buildings, in marketing and in contracts with landlords and suppliers, which will hopefully create a solid base for future growth. The company remains cautiously optimistic about future prospects.”