By Scott Wright

THE outspoken chairman of JD Wetherspoon has branded government restrictions to halt the spread of Covid as “kryptonite” for the hospitality industry, while highlighting pressure from rising food, drink and energy costs.

Tim Martin declared that the “readiness” of major UK political parties to “resort to lockdowns, and extreme restrictions” represent the “main threat to the future of the hospitality industry”.

Mr Martin issued the warning as Wetherspoon, which has 70 pubs in Scotland, reported a loss before tax of £21.3 million for the 26 weeks ended January 23, as sales continued to lag pre-pandemic levels. It had made a profit of £57.9m for the same period in 2020.

The preliminary results came after Wetherspoon had previously reported that sales were adversely affected by Covid restrictions in the first half, which ended on January 23, by Covid restrictions. Labour costs were also high largely due to Covid-related absences, the company said.

Restrictions were introduced by governments around the UK in December in response to the Omicron variant, which in Scotland resulted in the re-imposition of one-metre social distancing in hospitality settings, and the mandatory requirement of table service where alcohol was sold for consumption on the premises.

Those restrictions began to be lifted in February and will be further eased from Monday, when businesses will no longer have to collect customer details for contact tracing. However the requirement to wear face coverings on public transport and most indoor public settings will continue until at least early April.

Wetherspoon said yesterday that like-for-like sales were 11.8% lower in the first half compared with the six months ended January 26, 2020, before the pandemic struck, and were 12.4% lower for the first four weeks of the second half of its current financial year, ending February 20, compared with the same period two years ago.

The company reported that sales have improved in the most recent three-week period to March 13, though were 2.6% lower than the equivalent period in 2019.

“Following a traumatic two years for many businesses and people, the ending of Covid restrictions has brought a return to more normal trading patterns in recent weeks,” Mr Martin said. “As indicated above, trade for the last three weeks was 2.6% below the equivalent period in 2019, reflecting an improving trend.”

But Mr Martin declared: “Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses. The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK’s main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK’s 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy.”

Addressing the surge in inflation, which the Resolution Foundation has forecast will top 8% this spring, Mr Martin said that the company is insulated to some extent by the fact 70% of its pubs are freehold, and by long-term contracts on food, drink and energy. Its leasehold pubs have rent reviews fixed below the current rate of inflation.

“Overall, the company expects the increase in input prices to be slightly less than the level of inflation,” Mr Martin said.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Wetherspoon is one of a number of companies “facing an uphill battle with an onslaught of higher costs.”

“It’s now facing price pressures from food drink and energy suppliers, as the long struggle continues to regain its pre-pandemic form, forcing it to hike the price of pints at its pubs,” Ms Streeter said. “Despite high hopes that punters would once again be elbowing each other to get to the bar, the glass is very much half empty for the company, with pre-Covid levels of profits remaining elusive.’’

A spokesman for Wetherspoon told The Herald the company was continuing to look for sites to open new pubs in Scotland. The company was established by Mr Martin, its biggest shareholder, in Watford in 1979, and now has more than 850 pubs.

Shares closed up 15.5p, or 1.88%, at 842p.