James Moore: Don't shed too many tears for Tim Martin and JD Wetherspoon

 

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The Independent Online

Outlook Faced with disappointing sales figures, JD Wetherspoon indulged in a Wednesday whinge. First, the chairman and founder of the business, Tim Martin, is furious about the supermarkets and their loss-leading booze promotions. Of course, that one has been doing the rounds for a long time. It’s trotted out whenever pub chains find trading tough.

But there’s more: he’s also launched a broadside against his rival pubcos. They’ve been concentrating on their food offerings, opening up lots of what he describes as “quasi-restaurants”. While they’ve been doing this they’ve (apparently) singularly failed to line up behind him in a campaign for “tax equalisation” with those awful supermarkets, the rotters. Then there’s his industry’s trade paper, The Publican’s Morning Advertiser, which, says Mr Martin, has also refused to back him. 

A chairman using a Stock Exchange announcement to attack his trade paper? Clearly something’s rotten in Denmark. Or at least in JD Wetherspoon, which has built its reputation on traditional pubs that don’t have TVs and don’t play music at a volume that kills off any chance of a conversation.

The formula, which, to be fair, also includes some of the industry’s keenest pricing, has proved remarkably successful. Are the wheels now falling off thanks to the consumer’s preference for all those quasi-restaurants? Or is the fact that incomes are finally starting to outstrip inflation and unemployment is falling? Perhaps the recent slowdown is simply a blip. Certainly that’s what some of the analysts think.

In the meantime, don’t cry too many tears for Wetherspoon. It’s true that it gets hit disproportionately by this country’s iniquitous business rates, and by the VAT charged on the food it sells. But I’m much more inclined to feel sympathy for a family sandwich shop than I am a 900-strong pub chain, with economies of scale and easy access to cheap credit via the capital markets.

While it’s true the company’s operating margins are falling, in part thanks to paying staff more (and isn’t it funny how companies rarely moan about boardroom costs, which at Wetherspoon amounted to £2.1m last year?), they’re still at above 7 per cent. We’re not exactly comparing like with like here. But given that Mr Martin has opened the door with his talk of tax equalisation, it’s worth noting that most supermarkets would kill for something close to half that.

So Mr Martin really has no reason to feel bitter. Perhaps he’d be best advised to sit down with a pint of the stuff at his local Wetherspoon pub, where he could take the opportunity to come up with some new ideas on how better to compete? Just a thought.

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