British pub chain JD Wetherspoon has today reported a slowdown in recent sales growth and warned of a heavy blow to the industry if the government repeats last year's mix of tax increases and higher wage costs in this month's budget.
The company said it was slightly more cautious in its outlook for the remainder of the year.
The comments underscore the challenges facing Britain's hospitality sector, with even value-focused players like Wertherspoons struggling to draw in customers amid cost-of-living pressures.
Wetherspoon chair Tim Martin said another 10% increase in wages would increase the cost of a pint by about 15 pence in a pub compared to about 1.5 pence in a supermarket.
"Increased labour costs are, consequently, dramatically widening the pricing differential between pubs and supermarkets, to the anger and consternation of customers," he said.
UK finance minister Rachel Reeves is expected to have to raise billions of pounds in taxes in her November 26 budget to keep control of public finances, despite pledging a year ago that she would not repeat her revenue-raising measures then.
Analysts are particularly wary of Wetherspoons exposure to potential increases in labour costs and gaming machine duties, with staff wages accounting for about 40% of its sales, according to Peel Hunt analysts, and its high-margin gaming machines providing a buffer against other cost pressures.
The company, which runs more than 800 pubs in the UK and Ireland, reported a 3.7% rise in like-for-like sales in the 14 weeks to November 2, driven by bar sales and sales from gaming machines.
That was down from 5.1% growth in the previous 12 weeks.
