Pub chain JD Wetherspoon is in need of a stiff drink this morning after being hit by a profits slide precipitated by increasingly fierce price war shrinking its margins.
Caught between ever lower supermarket prices and a rising wage bill the chain saw profits dip 1.1 per cent to £55.1m for the 16 weeks to 25 January, even though revenues rose 9 per cent and like-for-like sales increased by 4.5 per cent.
Digesting the figures Wetherspoon chairman Tim martin commented: “The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff.
"As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs.
"Thanks mainly to the work of Jacques Borel's VAT Club, there is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country".
Martin has been locked in a battle with government to harmonise VAT after voicing concern that supermarkets are exempt from a 20 per cent rate on food and sales, allowing them to significantly undercut pubs and cafes.
Responding to an erosion of its profits Wetherpoons has been forced to diversify, branching out into the breakfast and coffee sectors.