Wetherspoons hit by ‘cautious’ older customers’ reluctance to return
JD Wetherspoon has warned of a dearth of older customers returning to its pubs with sales of drinks such as traditional ales and stouts down by almost a third compared with 2019.
The pub group said on Wednesday that sales in the 15 weeks to November 7 were down 8.9 per cent compared with the record turnover it achieved in the same period in 2019. It did not give a comparison with 2020 sales in its trading update.
Wetherspoons noted that demand for drinks generally preferred by the older demographic had suffered. Sales of stout fell 20 per cent against 2019 levels and traditional ales were down about 30 per cent.
Tim Martin, Wetherspoons’ long-serving founder and chair, said a “material proportion” of the company’s trade came from more senior drinkers thanks to its policy of not playing music or screening sports.
“Some customers have been understandably cautious. Improvement in trade will therefore depend, to some extent, on the outlook for the Covid-19 virus,” he said.
Turnover from breakfasts had also been hit by the number of people still working at home with coffee sales down 30 per cent against 2019.
Shares in the pub group were down more than 3 per cent in early London trading on Wednesday.
Analysts at Shore Capital queried whether consumers could be trading up to more expensive pubs due to a build-up of savings during lockdowns and a desire to treat themselves.
Wetherspoons, which was founded by Martin in 1979 and fell to its first ever pre-tax loss during the pandemic, is renowned for its cheap pints and food.
Despite lacking some of its traditional customer base, overall sales had improved versus the 17.8 per cent sales decline in the final 10 weeks of its previous financial year, when pubs reopened inside but restrictions such as social distancing and table service applied.
The group noted that younger clients had kept up a robust demand for spirits, with vodka up 17 per cent and rum 26 per cent in the 15 weeks to November 7. Sales of cocktails were up 45 per cent.
Wetherspoons also benefited from the boom in domestic holidays over the summer with sales at its hotels up 11.5 per cent. But, in line with other restaurant and pub companies, Wetherspoons said trading in London still remained far behind that in other regions. Sales rose 9 per cent in Liverpool and 11 per cent in Newcastle but were down by 17.4 per cent in London compared with 2019.
In recent weeks, Wetherspoons has reduced the price of some of its beers to 99p per pint and on meals such as fish and chips to £3.99 until the end of February in an attempt to boost sales.
Following a government tax break, the hospitality industry does not have to return to paying VAT at the full rate until March next year.
Douglas Jack, an analyst at Peel Hunt, said the price cuts would help turnover but the benefit was likely to be “offset by lower margins”.