Chairman Tim Martin likens J D Wetherspoon’s recovery to the “thousand components of a BMW,” telling MCA that “success comes from trying to improve all components.”
Following a strong set of results announced yesterday (10 May) – which saw like-for-like (lfl) sales at the 834-strong pubco rising beyond pre-pandemic levels – Martin emphasises a combination of improvements across all aspects of the business have worked in tandem.
With investments in repairs, improvements, staff training, and retention, all while maintaining a competitive price point, lfls were up 9.1% in the 13 weeks to 30 April, compared to the same period in 2019. The first May bank holiday weekend marked JDW’s busiest ever Saturday.
The business seems firmly back on a positive growth trajectory, with its last update revealing lfls 5% up on FY19 in the 26 weeks ended 29 January.
Recovery came none too soon, besieged by inflation, a cost of living crisis, and a set of older customers that remained wary of returning to their locals for a long time after restrictions eased.
However, Martin reports JDW’s core demographic has regained its confidence, simply saying “some older customers were slow to emerge post-lockdown…they’re back now.”
He also revealed there was little difference across geographies in the pubco’s sprawling estate, although city centre venues – despite dragging behind their suburban counterparts for long after lockdown – are now firmly back on their feet.
“There has been no noticeable geographical difference. However, counterintuitively, although people are working from home big city centres are rocking,” Martin says. “People stuck at home all day seem to want to get out of the neighbourhood on days off.”
This has proven true across the country, with city centres from Glasgow and Belfast to London picking back up. Central London is now doing well, although the City has been slower to recover than the West End, according to Martin.
As customer confidence claws its way back from historic lows, this trajectory seems likely to continue, with Martin reporting “several exciting projects in the pipeline” following noteworthy recent openings such as The Stargazer at the O2 and The London and North Western at Birmingham New Street.
Despite 30 venues remaining on the market or under offer, he says further optimisation of the portfolio is unlikely, with investments in the current estate remaining on priority.
The trading update received a largely positive reaction from City analysts.
According to Hargreaves Lansdown, “Wetherspoon’s value proposition is holding it in good stead as the cost-of-living crisis continues and the action to bring debt down and optimise its portfolio of pubs is the right move.
“However, top line growth won’t necessarily drive a similar uplift in profits, with Tim Martin noting that inflationary pressures had become ‘intractable’, which is likely to weigh on investors’ minds.”
Peel Hunt notes price rises of 7.5% have been implemented to mitigate inflation but failed to alienate customers: “the pickup in LFL sales indicates that this has not been fully offset by volume declines,” saying slower cost inflation lends to long-term recovery potential.
