Tim Martin claims tariff plans would have positive impact, as pub chain reports fall in profits
The JD Wetherspoon chairman, Tim Martin, has said no-deal Brexit tariff plans would lead to lower prices for consumers, as higher pay for staff dented profits at the pub chain.
Martin has been one of the most outspoken business proponents of leaving the EU without a deal, meaning trade would default to World Trade Organization terms.
The government revealed plans on Wednesday to cut tariffs to zero on 87% of British imports by value if there is no deal, but the plans would also raise tariffs on meat imported from the EU. That could impact Wetherspoon’s food sales, which accounted for 36% of revenues in its 879 pubs across the UK in the 26 weeks to 27 January, according to results published on Friday.
“If there’s no deal and we implement the tariff schedule that the government is suggesting I believe that prices will be lower than they otherwise would have been at Wetherspoon and elsewhere,” Martin said, highlighting possible tariff drops on oranges, bananas, and wines including New Zealand sauvignon blanc and Australian merlot.
Martin is an outlier in the hospitality trade in pushing for a no-deal Brexit. UKHospitality, an industry lobby group, this week said tariffs would raise prices for businesses and consumers, and has repeatedly warned a no-deal Brexit would be severely disruptive for the sector.
Martin said: “I think it’ll have a positive impact on our direct costs, but I think also if you get rid of tariffs and quotas I think it gives a message to foreign companies that you’re open for business.”
His comments came as Wetherspoon reported lower profits for the period. Profit before tax fell by 19% compared with the same period a year ago, to £50.3m, as staff costs increased by £33m.
The increase in pay was due to historically low unemployment rates, which drove up wages for new and existing staff, Martin said. The company has faced strike action from employees seeking better pay.
Revenues rose by 7.1% to almost £890m, and like-for-like sales by 6.3%.
Wetherspoon’s investments in existing and new pubs fell year on year, which Martin said was caused by higher spending a year ago on new coffee machines and pizza ovens. Overall investment, however, was boosted by £55.7m used to buy the freeholds on properties where Wetherspoon was previously a tenant.
Martin said Wetherspoon would increase spending on new pubs and add beer gardens and hotel rooms to its existing estate in the coming year.
Trading since January has been bolstered by warmer weather and the comparison with lower earnings a year ago when the “beast from the east” dented consumer spending. Costs in the second half of the year would be higher, Wetherspoon said.
The Guardian
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