Pub Chain Boss Points to VAT Discrepancies as Contributing to Pub Closures and Supermarket Growth
Tim Martin, the outspoken chairman of Wetherspoon, has blamed politicians for the ongoing decline of the pub industry, pointing specifically to a preference for home-based dinner parties over pub visits. In his latest update to investors, Martin revealed that Wetherspoon would face an additional £60 million in costs starting in April, primarily due to the tax disparity between alcohol purchased in shops and drinks consumed at pubs.
Martin explained that the current VAT system, where alcohol bought in supermarkets is exempt from VAT while pub purchases incur the tax, is fundamentally unfair. He argued that such discrepancies are driving the rise of supermarkets at the expense of traditional pubs, despite the public’s strong affection for their local watering holes.
He added: “Politicians, especially prime ministers, have been more inclined to host dinner parties than frequent pubs. This, unfortunately, has shaped tax policy, where food at private dinners remains VAT-free, while the pub-goers, like the ‘man on the Clapham omnibus’, are taxed.”
Martin further called on Labour leader Sir Keir Starmer to address this imbalance, stating that correcting this would promote fairness in tax policy and bring an end to the favouritism shown to home dining over pub culture.
In financial terms, Wetherspoon reported a 5.1% increase in like-for-like sales for the 25 weeks up to 19 January 2025. Bar sales grew by 4.5%, food sales by 5.6%, and slot machine revenues by 11.7%. However, hotel room sales fell by 6.5%, and Wetherspoon’s hotel division continues to face challenges. During the busy Christmas period, sales increased by 6.1%.
Despite these challenges, Wetherspoon has continued to expand, opening two new pubs in Marlow and at London’s Waterloo station, with plans for seven more locations across the UK in 2025, including at prominent sites such as London Bridge and Manchester Airport.
Charlie Huggins, manager of Wealth Club’s ‘Quality Shares Portfolio’, remarked that while Wetherspoon has seen consistent sales growth, the substantial increase in operating costs—particularly a £60 million rise in labour-related expenses—is putting pressure on the company’s profit margins. He noted that Wetherspoon would need to balance price hikes carefully to avoid alienating its loyal customer base, yet still maintain profitability in the face of rising costs.