JD Wetherspoon has seen its operating profit drop by 4.3% year-on-year to £64.8m, with the pub chain pointing to increasing "labour and utility costs" as the reason.

In the 26 weeks to 26 January, Wetherspoons saw its profit before tax drop by 8.6% to £32.9m, while its revenue increased by 3.9% on the same period in 2024 to just under £1.03bn.

Furthermore, its like-for-like (LFL) sales increased by 4.8%, while bar and food LFL sales jumped by 4.3% and 5.4%, respectively.

The pub group has declared an interim of four pence per share for the period, compared to no dividend for the same period last year. This will be paid to shareholders on 30 May.

Wetherspoons chairman, Tim Martin, said: "In the last seven weeks, to 16 March 2025, LFL sales increased by 5%.

"Increases in national insurance and labour rates will result in company cost increases of approximately £60m per annum, which amount to approximately £1,500 per pub, per week.

"Since labour costs are around 35% of the pub industry's sales, compared to around 11% for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade.

"The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance."

As a result, the group said that the combination of "much higher VAT rates for pubs than supermarkets", and increased labour costs, which will be introduced next month as a result of employer national insurance contributions, will "weigh heavily on the pub industry".

Following the announcement of the results, shares in the pub chain fell by 7.7%.

Head of markets at interactive investor, Richard Hunter, stated that although Wetherspoons is continuing to improve, outside economic activity is having an effect.

He concluded: "There are clearly signs of further progress for Wetherspoons, but a weaker wider market and the moribund outlook for the UK economy have brushed any positives aside.

"Wetherspoons has been able to pass on some of the inflationary costs without diminishing its appeal, but equally it will be mindful that prospects for the UK economy are currently tepid at best, which could yet result in the consumer choosing to stay at home rather than venture out as the more challenging financial times bite.

"Despite any progress which Wetherspoons has been able to engineer, the general level of uncertainty around prospects has weighed heavily on the share price. The shares are down by 25% over the last year, as compared to a gain of 1.8% for the wider FTSE 250, while the picture over the last five years is rather darker."

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