Wetherspoon’s owner Tim Martin has seen profits slashed and now believes that price hikes are now inevitable, due to inflation.
The governor of the Bank of England, has warned companies to be mindful of how much they put up prices to avoid continuing to fuel an inflationary cycle, now at 10.4%
Martin has said that they may have little choice but to increase prices.
“The two things that keep price rises low are competition and, by definition, low inflation,” Tim Martin said. “If input costs are high, which they are in the hospitality industry, it’s very difficult for pub companies to avoid price rises, and it might produce catastrophic results if Mr Bailey’s advice was taken too literally – although he’s right to say it.”
The pub chain edged back into the black, posting half-year pre-tax profits of £4.6mn, down 90 per cent compared with the equivalent period in 2019 but up from a loss of £26.1mn in the first half of last year.
“Inflationary pressures in the pub industry . . . have been ferocious, particularly in respect of energy, food and labour,” said Tim Martin, Wetherspoons’ founder and chair.
Earlier this year, Wetherspoons increased prices by 7.5 per cent, increasing the price of a pint by 29p and food by around 75p.
Mr Martin said: “The Bank of England, and other authorities, believe that inflation is on the wane, which will certainly be of great benefit, if correct.
“Having experienced a substantial improvement in sales and profits, compared to our most recent financial year, and with a strengthened balance sheet, compared both to last year and to the pre-pandemic period, the company is cautiously optimistic about further progress in the current financial year and in the years ahead.”