Wetherspoon has warned the price of food across its pubs will increase later this year when a cut to VAT rates comes to an end.
Hospitality businesses have been granted a reduced rate of 5% to help ease their financial burden during the coronavirus crisis.
But this will go up to 12.5% from October this year, before returning to its full level of 20% in April 2022.
Wetherspoon confirmed the prices of its food will go up as a result in a trading update today, saying the increase will be around 40 pence per meal.
The pub chain had been passing on savings from the VAT cut to customers, lowering the price of its food as a result during lockdown.
Meanwhile, Wetherspoon confirmed its sales have continued to fall despite lockdown measures being lifted.
Like-for-like bar and food sales plunged 49% between April 12 and May 16, when outdoor dining was allowed and 500 of its 860 pubs were open.
The pub chain said sales were also still down 14.6% between May 17 and July 4, the start date of which was when pubs could reopen for indoor dining.
Wetherspoon said it plans to discuss debt waivers with its lenders following the sales hit.
But it added that 850 of its pubs are now open, with the sites that remain closed mainly at airports.
Wetherspoon said it has opened two new pubs in the past six months and now has an investment pipeline which includes 18 new sites.
The company said: “The Chancellor reduced VAT on food for the hospitality industry to 5% last year, still above the rate paid by supermarkets, which was nonetheless welcome.
“However, it is now proposed that VAT returns to 20%, in stages, in the next year.
“The interim rise to VAT of 12.5% will result in Wetherspoon having to increase food prices by around 40 pence per meal.”
Tim Martin, chairman and founder of Wetherspoon, said: "The company continues to expect to make a loss for the year ending July 25.
"In a trading update of January 19, the company's principal 'scenario' estimated sales in the financial year starting July 26 to be in line with financial year 2019.
"[This] remains our current best estimate, on the basis that restrictions are ended, as the Government currently intends."
