Pub chain JD Wetherspoon plans to sell a further 39 pubs after shedding five sites in the past three months amid a slow recovery in business since the pandemic closed hospitality.
The group said it faces “significantly higher” costs, particularly for repairs to its pubs, paying staff and food. It also said it would pay an extra £10m in interest next year due to higher interest rates.
The company said most of the locations it has launched are within a mile or two of other locations. It raised £1.9m from the sale of five others as it joined a string of pub businesses closing sites after being hit by rising costs, including rising energy bills as consumers rein in their spending.
JD Wetherspoon also chose not to renew its lease for its outlets at Doncaster Airport, saying it would open just one new pub in the 14 weeks to November 6.
The closures mark a change of direction for the business, which just 18 months ago announced plans to press ahead with the opening of 18 new pubs and is carrying out significant extensions and upgrades to more than 50 other locations.
It now has 23 fewer pubs than it did in March 2021, when it ran 870 sites, and pledged to invest £145m in new sites and refurbishments as it bets on a return to business after the first year of Covid.
However, since then consumers and businesses have been hit by rising inflation while the squeeze on household budgets has left many consumers with less cash to spend down the pub.
The group’s chairman, Tim Martin, warned that there were still “various threats to the hospitality industry” after the pandemic.
Despite the latest closures, he said he did not think the company’s fortunes had reached their peak, adding that he believed the chain could add another 100 to 150 pubs.
Martin said the group was about to open new pubs at Birmingham New Street station and Gatwick Airport.
Sales at the chain were almost 10% higher in the 14 weeks to November 6 than the same period a year ago, but only 0.4% higher than in 2019. October was a slower month for trading, with Wetherspoon’s pub sales down 1% memory. than in 2019.
Victoria Scholar, head of investment at trading platform Interactive Investor, said: “No doubt Wetherspoon’s will be hoping for a boost in sales around the FIFA World Cup and around the seasonally important festive period … with the possibility of booking Christmas parties to boost sales.”
Wetherspoon’s shares have fallen almost 50% year-to-date amid a worsening economic picture from rising inflation, a cost-of-living crisis and higher interest rates.