Shares in JD Wetherspoon (LON:JDW) lost their froth after the publican served up higher sales but predicted annual profits towards the lower end of market hopes.
Wetherspoon said like-for-like sales increased 3.3% and total sales 6.3% in the first 12 weeks of the second quarter to January 17.
But the stock tanked 64p, or 9.5%, to 610.5p after chairman Tim Martin said labour cost rises were likely to affect the outcome for this financial year.
"Our current view is profits for this year are likely to be towards the lower end of analysts' expectations," he said.
AJ Bell investment director Russ Mould said: "The problem is rising staff costs where the group has little room for manoeuvre.
"Operating margins have fallen to around 6.3% following increases in the starting rates for hourly paid staff, offsetting improvements in second quarter sales."
Shore Capital analyst Greg Johnson said: "We had expected first half margins to be lower than the full year as a consequence of staffing costs however the magnitude of the decline is worse than our expectations. We continue to see better value elsewhere in the sector."
In the year to date, including the 25 weeks to January 17, like-for-like sales increased 2.8% and total sales rose 6.1%.
Wetherspoon increased the starting pay rates for hourly-paid staff in October 2014 and August 2015 by about 13%.
It said that would result in a 1.1% fall in the operating margin for the half-year to January 24 to about 6.3%.
The company opened five pubs since the start of the financial year and has sold two. It intends to open 10 to 15 pubs this financial year.
Wetherspoon has been at the forefront of efforts by the pub industry to get the government to reduce tax on the licensed trade relative to supermarkets.