Tim Martin said the pub chain was "doing quite well" but was facing increased costs © PA Images
Tim Martin said the pub chain was "doing quite well" but was facing increased costs © PA Images

UK sugar tax set to cost JD Wetherspoon £3m

16 March 2018

Chairman of JD Wetherspoon Tim Martin has hit out at the UK's impending sugar tax for loading more costs onto an already under-pressure restaurant sector.

Speaking on the BBC’s Today programme Martin said the Soft Drink Industry Levy, known as the ‘sugar tax’, which will be enforced from 6 April, would add £3m to Wetherspoon's costs in the second half of the year.

“Pay is going up quite a lot, which people think is a good thing, and all sorts of taxes and Jamie Oliver’s sugar tax, which he got us to pay but couldn’t afford to pay himself, is costing us £3m alone,” he said. 

When asked if higher costs could relate to Brexit, Martin said it was domestic policy and not Brexit that was increasing costs.

“None of the costs in the second half of the year are because of Brexit – the Brexit thing has been wildly overdone and a very small percentage of overall costs,” he said. 

“[The £3m cost increase] is a bit more than the increase in rates, so it’s an era of rising taxes for pub and restaurant companies, which makes life more difficult.”

The levy applies to the production and importation of soft drinks containing added sugar – drinks with a total sugar content of over 5g but below 8g per 100ml will be subject to a lower rate, while those producing drinks with over 8g of sugar per 100ml will face a higher rate.

Wetherspoon has posted a 36.1% rise in pre-tax profit to £54.3m in the 26 weeks to 28 January, with a revenue increase of 3.6% to £830.4m.

Asked why he thought his chain was doing so well while other casual dining restaurants were not, Martin said there had been a backlash against “trendy-type” restaurant chains.

“We are technically facing the same pressures but we seem to being doing quite well … I think that a lot of trendy-type restaurant companies have opened up around the same time in the last 10 years, paid huge rents and the glitter has worn off a bit and they’ve suffered a backlash from customers,” he said.

“In the pub world or more prosaic world of Greggs or McDonald’s or Starbucks, I think things are going reasonably well so we’ve had a good six months.” 

However, he added that the higher costs predicted for the second half of the financial year made him wary of the future.

“In view of those additional costs, and our expectation that growth in like-for-like sales will be lower in the next six months, the company remains cautious about the second half of the year.”

Celebrity chef Jamie Oliver campaigned extensively for the UK government to introduce a tax on sugary beverages.

Last month Oliver’s Jamie’s Italian restaurant chain was forced to close sites and negotiate rent cuts – a move to save the business from folding. His Barbecoa restaurants meanwhile went into administration.

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