Wetherspoon shares fall after profit warning amid rising costs
Wetherspoon shares tumbled on Wednesday after the pub giant revealed the financial impact from November’s tax-hiking Budget, reports BritPanorama.
The FTSE 250 company indicated that rising costs, driven by increases in energy, wages, repairs, and business rates, had inflated expenses by £45 million in the 25 weeks to mid-January. This suggests an annual cost surge of up to £94 million.
As one of Britain’s largest pub operators, with nearly 800 locations, the firm cautioned that profit would likely fall below the previous financial year’s performance. “We are pleased with sales growth [but] costs have been higher than anticipated,” said chief executive Tim Martin.
Following the profit warning, Wetherspoon shares experienced a decline of over 7%, reflecting investor concerns as reported by City AM.
Analyst Anna Barnfather at Panmure Liberum stated, “We continue to see downside risk to forecasts given the structurally low-margin model and ongoing cost inflation.” She expressed doubts regarding the longer-term margin recovery potential as labor costs increase, and the scope for further price hikes and disposals diminishes.
This warning places Wetherspoon among a growing list of pub groups attributing decreased profits and rising expenses to escalating business rates, which have gained attention due to the government’s controversial reform of the commercial property tax and the termination of Covid-era financial assistance. The average business rates bill faced by hospitality firms is poised to rise by 94% over three years, driven by property revaluations and the withdrawal of pandemic supports.
The hospitality industry’s outcry over business rates led Chancellor Rachel Reeves to promise “temporary support” for struggling pubs.
Recent labor market statistics from the Office for National Statistics illustrated the sector’s challenges, with a loss of 20,014 jobs between September and December 2025. This decline occurred during a period when businesses would typically be hiring staff in preparation for the busy Christmas season.
The data highlights the significant difficulties facing hospitality businesses as changes to employer National Insurance contributions and increasing employment costs exert financial pressure on the industry.
Consecutive Budgets have significantly raised the fiscal burden on hospitality firms, with businesses bracing for another substantial impact in April when business rates are expected to climb dramatically.
Despite these challenges, Wetherspoon reported a 4.7% increase in like-for-like sales during the second half of the year, attributed to improved performance in both food and beverage categories.
Bar sales surged by 6.9%, and while food saw a modest growth of 1.3%, this was offset by a slight 0.7% drop in hotel revenues. Gaming machine and fruit machine revenues recorded robust growth at 9.1%, with comparable sales in the fourth quarter increasing by 6.1% year on year.
The pre-Christmas rush also spurred a rise in foot traffic, with takings during the peak festive period advancing by 8.8%, though elevated expenses dampened these sales gains.
In light of rising costs, Britain’s most prominent pub operator opened six new venues throughout 2025, including sites at London Bridge station and Paddington, with plans to unveil an additional 15 establishments within this fiscal period.
Additionally, six locations were sold off, generating £3.3 million and maintaining the group’s directly managed portfolio at 794 pubs, while eight franchise outlets were launched simultaneously.
A forecast suggests the launch of an additional ten to 15 franchise operations this year, including the inaugural Spanish opening at Alicante Airport.
This situation reflects wider trends affecting the hospitality sector, particularly as economic pressures mount and businesses adapt to a changing landscape. The increase in operational costs and the impacts of fiscal policy underscore the complexities faced by pub operators like Wetherspoon in maintaining profitability while navigating a post-Covid economic environment.
