The pandemic has caused significant disruption to the pub trade which Tim Martin described as a “traumatic two years”. Commenting on the pub chain’s results he welcomed the end of restrictions as “a return to more normal trading patterns”. While welcoming the end of Covid rules he also took to opportunity to warn against any future measures which could damage trade. He said: “ Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses.
“The company is confident of a strong future if restrictions are avoided.
“The readiness of the leaders of all the UK’s main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK’s 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy. “
In addition to lockdowns, which forced the complete closure of pubs, hospitality venues also had to implement a wide range of measures over the pandemic years including limits on the numbers of people per booking, table service, only serving alcohol with a substantial meal, and enforcing social distancing and mask wearing.
According to a study by Oxford Economics over eight hundred pubs closed during the pandemic despite Government support.
During the pandemic VAT for hospitality businesses was cut from 20 percent to 5 percent before rising to 12.5 percent in October 2021.
From 31 March 2022 it is set to return to 20 percent.
The issue of VAT has been a long cause of concern for Mr Martin who has argued for equality between pubs and supermarkets.
Writing in todays results he said: “The government would generate more revenue and jobs if it were to create tax equality among supermarkets, pubs and restaurants.
“Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20 percent.
“This has enabled supermarkets to subsidize the price of alcoholic drinks, widening the price gap, to the detriment of pubs and restaurants.
“Pubs also pay around 20 pence a pint in business rates, whereas supermarkets pay only about two pence, creating further inequality.”
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The rise in VAT at the end of March comes as UK inflation is expected to peak in the spring, leading to fears pubs could respond by further increasing prices to deal with the cost pressures.
Wetherspoons meanwhile remains relatively confident of its position pointing out the pressure on food, drink and energy costs has been mitigated by a number of long term contracts.
It also added nearly 70 percent of its properties are freehold with fixed interest rates while its leasehold pubs are on rent reviews fixed below levels of current inflation.
Overall the firm expects increases in its input prices to remain slightly less than the level of inflation.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown warned the chain still faced an “uphill battle” though.
She said: “Despite high hopes that punters would once again be elbowing each other to get to the bar, the glass is very much half empty for the company, with pre-Covid levels of profits remaining elusive.
“Just in the last few weeks, the outlook is brighter with sales improving, but they are still 2.6 percent lower than the same period in 2019.”