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The UK hospitality industry is under pressure at the moment. But nobody seems to have told JD Wetherspoon (LSE:JDW) – the FTSE 250 company seems to be going from strength to strength.
Sometimes, attractive opportunities can show up in unpromising places. And I think the firm stands to benefit from two major trends that are developing right now.
Resilience
The first big theme is resilience. While bars and restaurants have been struggling over the last few months, pubs have been making progress.
According to the CGA RSM Business Tracker, like-for-like sales have been falling at bars and restaurants since the start of the year. But pubs, by contrast, have been growing strongly.
JD Wetherspoon is no exception. The firm’s latest trading update reported like-for-like sales growth of 5.6% during the 13 weeks leading up to the end of April.
The hospitality sector as a whole might be under pressure, but this business not so much!
Competition
The second theme is competition. Despite the resilience across the industry, the Campaign for Real Ale reports that 303 pubs closed in the first three months of 2025.
Some of these have been JD Wetherspoon pubs. The firm has reduced its number of outlets by five since the start of the year as it looks to focus on bigger, more profitable, venues.
In general though, other pubs closing is a good thing for the FTSE 250 company. Fewer outlets means less competition and that’s a boost for any business.
In other words, I think JD Wetherspoon’s competitive position is getting stronger as things get more challenging in the hospitality industry. And that’s another very positive sign.
Rising costs
I think JD Wetherspoon has an unusually strong position in its own industry. But it’s not immune from the increased costs that have been coming through in the last couple of months.
A rising National Living Wage is great for workers but is a long-term risk for the company – I don’t see it going down at any point in the future. And this is something investors should keep an eye on.
So far, the firm has coped admirably. Where other operators have increased prices to offset higher costs, JD Wetherspoon has actually announced lower prices in recent weeks.
In doing so, the firm has widened the gap between its prices and those of its competitors. How long it can keep doing this remains to be seen, but I think it’s very impressive so far.
I’m a buyer
The hospitality sector is under pressure as we know, but the specific pub industry is faring relatively well. And JD Wetherspoon appears to be coping better than most of its rivals.
Its lower prices strategy in the face of inflation in the sector is strengthening its competitive position, which is why I’m still buying the stock.
I’ve been convinced by the company from an investment perspective for some time. And with the stock up around 30% in the last three months, the market is starting to agree.
