If Wetherspoon is feeling the pinch, what hope for the rest of UK pub market?
Friday's profit warning sent JDW's shares spiralling down 28%. Chairman Tim Martin saw £23m wiped off his personal fortune. But what's the surprise?
City analysts and investors should know how tough trading has been in the pub, bar and restaurant these past six months or so. The evidence is there from the corporate failures to the warning voices of the industry's other big hitters, such as Luminar's Steve Thomas and PizzaExpress's David Page.
The City has to take its own view, but its reaction to stuttering growth can't be seen as a true reflection of what's happening at an operational level. The Stock Market needs to be discounted by operators for the moment
And that's what we are talking about here, slowing growth not falling sales or wholesale consumer desertion from the leisure sector. Wetherspoon's warning was that beer sales were flat and like-for-like growth had slowed to 3%. Expansion would now be cut to 50 or 60 new sites a year.
We know the issues. They've been tossed around in these pages enough in recent weeks. Over ambition by both operators and investors, over-supply, especially in the High Street, flagging innovation, growing consumer caution and perhaps a little fatigue – all go into the mix.
The market is far from dead, but is going through a period of realignment and correction that will throw up both casualties and opportunities. Wetherspoon's performance just adds more depth to the analysis of what is actually happening out there - and what should happen.
A slow-down in the break-neck roll-out programmes of many brand and concept owners is inevitable. The market can't take it, certainly not on the high street, where supply is out-stripping demand. It may be time to put more focus on working and securing existing business rather than looking for new.
Wetherspoon's also demonstrates that although the drinking out market may be stalling, the food market isn't. Eating out may be more competitive, but there's no evidence to suggest that the British public has lost its appetite for out-of-home consumption.
JDW has taken a conscious decision to take its food operation more seriously. It's working, with food like-for-likes up 14% - although it now faces the problem of getting its food and drink balance right to maximise margin.
Leveraging food against drink, and vice verse, is a key art. It is interesting that a "restaurant concept" like the growing La Tasca tapas chain is now tapping into the Friday and Saturday girls night out market, probably at the expense of mainstream bars. Has the bar market noticed? Consumers always want something new. JDW knows that and is working hard on the positioning of its still fledgling Lloyds operation.
Price point and discounting is another big issue. Providing value doesn't mean having to be cheap, and offering a £10 a head meal option doesn't mean everything has to be at that price point. Discounting drink prices will win custom from old style boozers, but is it sustainable? This issue will run and getting it right could be crucial to many an operator's survival.
News from Wetherspoon, which operates in a broad range of locations, suggests that the suburbs may also be experiencing the tightening in trade afflicting the high street..
This week's results from SixC and Scottish & Newcastle should provide a better take on that – and on the resilience of eating out.
The market is fluid, to say the least, and no-one is saying there's not going to be more blood on the streets. But let's get a reasoned perspective.
Friday's profit warning sent JDW's shares spiralling down 28%. Chairman Tim Martin saw £23m wiped off his personal fortune. But what's the surprise?
City analysts and investors should know how tough trading has been in the pub, bar and restaurant these past six months or so. The evidence is there from the corporate failures to the warning voices of the industry's other big hitters, such as Luminar's Steve Thomas and PizzaExpress's David Page.
The City has to take its own view, but its reaction to stuttering growth can't be seen as a true reflection of what's happening at an operational level. The Stock Market needs to be discounted by operators for the moment
And that's what we are talking about here, slowing growth not falling sales or wholesale consumer desertion from the leisure sector. Wetherspoon's warning was that beer sales were flat and like-for-like growth had slowed to 3%. Expansion would now be cut to 50 or 60 new sites a year.
We know the issues. They've been tossed around in these pages enough in recent weeks. Over ambition by both operators and investors, over-supply, especially in the High Street, flagging innovation, growing consumer caution and perhaps a little fatigue – all go into the mix.
The market is far from dead, but is going through a period of realignment and correction that will throw up both casualties and opportunities. Wetherspoon's performance just adds more depth to the analysis of what is actually happening out there - and what should happen.
A slow-down in the break-neck roll-out programmes of many brand and concept owners is inevitable. The market can't take it, certainly not on the high street, where supply is out-stripping demand. It may be time to put more focus on working and securing existing business rather than looking for new.
Wetherspoon's also demonstrates that although the drinking out market may be stalling, the food market isn't. Eating out may be more competitive, but there's no evidence to suggest that the British public has lost its appetite for out-of-home consumption.
JDW has taken a conscious decision to take its food operation more seriously. It's working, with food like-for-likes up 14% - although it now faces the problem of getting its food and drink balance right to maximise margin.
Leveraging food against drink, and vice verse, is a key art. It is interesting that a "restaurant concept" like the growing La Tasca tapas chain is now tapping into the Friday and Saturday girls night out market, probably at the expense of mainstream bars. Has the bar market noticed? Consumers always want something new. JDW knows that and is working hard on the positioning of its still fledgling Lloyds operation.
Price point and discounting is another big issue. Providing value doesn't mean having to be cheap, and offering a £10 a head meal option doesn't mean everything has to be at that price point. Discounting drink prices will win custom from old style boozers, but is it sustainable? This issue will run and getting it right could be crucial to many an operator's survival.
News from Wetherspoon, which operates in a broad range of locations, suggests that the suburbs may also be experiencing the tightening in trade afflicting the high street..
This week's results from SixC and Scottish & Newcastle should provide a better take on that – and on the resilience of eating out.
The market is fluid, to say the least, and no-one is saying there's not going to be more blood on the streets. But let's get a reasoned perspective.
