J D Wetherspoon shares fell 13 per cent to 1,138p today after it announced a rise in sales, but warned its decision to hand staff a wage increase without increasing prices will impact full-year profits.
The pub chain, which has almost 1,000 branches in the UK, said like-for-like sales increased 5.5 per cent and total sales by 6.2 per cent in the 13 weeks to 28 October.
But the company warned comparative sales are now tougher and that its increase in wages will cut into profits.
Wetherspoon chairman Tim Martin, who is currently recovering from an operation after a burst appendix, said: “As has been widely reported, unemployment is at a record low, putting upward pressure on wages.
“It is difficult to be too precise at this early stage of the current financial year, but we now expect a trading outcome slightly below that achieved in the previous financial year.”
Martin said the company does not expect to match recent years of record profits, but would not be putting prices up immediately, as it plans to open five to 10 new pubs in the current financial year.
“The long-term aim is to try and increase prices less than inflation and to increase pay than more than inflation,” he told City A.M.
The chairman, who was a vocal Leave campaigner, also used the trading update to criticise Remain supporters.
“The pro-EU dogma is the product of an undemocratic ideology, mainly – and surprisingly – promoted by Oxbridge graduates in influential jobs,” he said.
"The economic truth is that no deal/free trade will leave the UK better off on the day we leave the EU in March next year. The risk to the future lies in staying linked to the chaotic and undemocratic Brussels regime.”
His views run counter to many other business leaders, with more than 70 City grandees joining calls last weekend for a so-called people's vote on any proposed Brexit deal between the UK and EU.
The chain has replaced alcohol from the EU – such as Jagermeister, Courvoisier and German beer – with UK and non-EU brands.