Wetherspoon, the pub chain with over 1000 locations across the UK, is feeling the impact of chancellor George Osborne’s new minimum wage rules.
The company released a trading statement on Wednesday, and margins are already on the way down, allen from 7.7% in the same period last year, to 6.2% this year.
Margins were driven down by a 13% increase in starting wages for staff paid hourly between October last year and August. The increase has been put in place to start to bring Wetherspoon’s pay rates in line with the new wage rules.
Under new laws, the current £6.50 ($US10) per hour National Minimum Wage will be abolished in favour of a £7.2o ($US11.10) National Living Wage, proposed by the government to ensure that all full-time workers earn enough to pay for basic necessities like rent, bills, transport and food, without the need to take a second job.
In a statement, Wetherspoon’s founder and chairman Tim Martin took a thinly veiled dig at Osborne’s new Living Wage, saying (emphasis ours):
As we indicated in September, it is difficult to quantify exactly the factors which will influence our trading performance in the early stages of a financial year. Increased labour costs are clearly an important factor for all pub and restaurant companies and may result in our annual profits being slightly lower than the last financial year. We will provide updates in our regular statements.”
Martin — who named the chain after a teacher who told him he would amount to nothing — has been highly critical of the government in the past few months, both for the National Living Wage, and for what he perceives as an unfair system of taxing for pubs.
In September he said: “By pushing up the cost of wages by a large factor, the government is inevitably putting financial pressure on pubs, many of which have already closed.”
“As we have previously stated, we believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants.”
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