JD Wetherspoon chairman Tim Martin has told M&C Report that a lot of pubs are still “greatly over-rented” as a legacy of the last financial boom.
Announcing its latest results this morning for the 11 weeks to 14 July, Wetherspoons said that it intends to provide an update on any impairment and onerous lease provisions at its full-year results.
Asked about the state of the property market, Martin said: “I think there’s quite a hot property market in London. Out of London, in the pub trade there’s still a lot of pubs that are greatly over-rented - and in London, as a matter of fact.
“The tail end of the last boom is a legacy of over-rented pubs. I suppose the effects of this can last for a few decades in some places. There’s probably quite a lot of people seeking to open pubs and restaurants in the south east but I would guess that demand is subdued in the rest of the country.”
Martin also suggested that consumer confidence may have “turned a corner”. He said it’s “always hard” to determine what the feel-good factor is on a “business basis”, but said: “It’s about five years since the credit crunch and we haven’t gone to hell in a handcart, we’ve just had to tighten our belts a bit.”
This morning Wetherspoons reported an improvement in operating margin, which was 9.5% in the 11 weeks (including some one-off benefits) against 8.7% in the year-to-date (50 weeks to 14 July). Martin said the company’s prices are c2% ahead of this time last year - “that helps a little bit” - while the recent cut in beer duty has been a “great help”. The company also had fewer one-off costs associated with its long-running property dispute.
Like-for-like sales grew 3.5% in the 11 weeks, with total sales up 6.2%. Martin attributed the rise to a “variety of small factors”, such as developments of the menu and the range of beers, personnel and pub designs.
Martin said the weather over the period had been a “minor plus” for the company. “I think we are more weather neutral than most,” he added.
