The Wetherspoons chairman shares his latest wheeze in the pub company around chilled bottle beer and branded pint glasses; how he plans to reach 1,000 sites; and his multimillion-pound investment blunder

Tim

Fresh from celebrating the pub company’s best results in years, founder and chairman Sir Tim Martin returned to the Pub Conference to share how Wetherspoons has achieved a surge in profits.

Sir Tim discussed the company’s target to reach 1,000 sites, lessons learned the turbulence of recent years, and the importance of spending time in pubs and listening to customers.

Small initiatives, bottled beer and branded glasses

Some people look at pubs and other businesses in terms of big initiatives. Not Tim Martin. For him its about lots of small initiatives.

“We think bottled beer might become bigger in the future,” he says, by way of example.

The problem with bottled beer is it often gets delivered somewhere which isn’t chilled to the level it needs to be.

When pubs sell lots of bottles, they tend to reload the fridge with warm beer and it doesn’t have enough time to chill.

“We’re trying to get all our beer delivered into a cold store,” he reveals.

“Our finance director begs me not to think of any more initiatives because that one is £12m-£15m or something.”

Another small initiative – with a not insignificant price tag of £12m – is investment into hidden racks above bars to meet a consumer preference for banded glassware.

“These things aren’t always expensive, but they often are. Those little ideas are mostly generated from people in the pubs.”

Creatures of habit and the legacy of Covid

The Wetherspoons chairman acknowledges his views on Covid might be controversial.

But while he accepts there were real risks, he argues scare tactics were used to encourage people to stay at home, which has left a legacy of cautiousness for some people returning to public spaces.

“If you speak to a GP, they will tell you that a third of patients don’t need to be in the waiting room. You don’t need to do much with human beings to wind us up about health. That’s part of the legacy.”

Another legacy is consumers’ normal habits, such as going to the pub, were broken by lockdown.

Once people got used to staying at home and drinking cheap beer from Tesco, those habits have been difficult to reverse.

Returning to a favourite rallying point, Martin argues this transfer of spending from pubs to supermarkets has been one of the sector’s greatest failures.

“There’s a guy called Ray Dalio, who after Warren Buffett might be the world’s greatest investor. He said good solutions depend upon the truth.

“The inconvenient truth is that the pub business has to some extent been a failure in the 45 years I’ve been in the trade. Over 50% of the beer that was sold in pubs in 1979 is now got to supermarkets. The 50% from supermarkets before the pandemic is now at 60%.

“What’s fucked up the pub business is we pay 20% VAT on food sales, and half of our sales at Wetherspoons are food, and supermarkets pay nothing.

“That means the pub business has been the worst in Europe because almost every other country in Europe has got a reduction in VAT on food.

“I think Tesco makes more than the hospitality industry combined. I don’t think the pub industry has really faced up to reality.”

Smaller estate, bigger sales, costly mistakes

While Wetherspoons may have a smaller estate than it did 10 years ago, it has higher group sales, and greater sales per pub.

Profit-wise, the company still hasn’t got back to where it was pre-pandemic.

“If we made a mistake, it was we thought we could put two big pubs quite close to each other in relatively small towns, and we thought we could expand into pubs with music [Lloyds No1].

“That proved to be too optimistic and it’s quite difficult to do two things. A lot of the big brewers have multiple pub brands, and I take my hat off to them.

“That was quite a big mistake by the way. I saw Paul O’Grady interviewing someone who swam with sharks. The guy said they only bite people by mistake and Paul O’Grady said yeah, but that’s quite a big mistake, isn’t it?

“It was a £100m quid mistake. If told everyone at the time I would have been fired!”

At one point the group was up to 950 sites, though now it is at around 800 – with a target to get up to 1000.

“Probably there are 100 or 200 sites that we could go to, but it’s quite difficult actually.

“It’s much harder now than it was. We opened 100 a year between 1998 and 2001 from a base of 350 pubs. I don’t know how we did it, we opened seven on one day.

“It becomes very difficult when you get to 800 sites to select things which are genuinely going to be good and aren’t going to pinch straight from a nearby site.”

Price points, cask ale and Irish stout

In public, Martin feigns nonchalance about Wetherspoons’ pricing strategy. But behind closed doors the company is known to drive a shrewd bargain with suppliers, and often remains cheaper than its peers.

When asked about his pricing strategy, he recalls sage advice from Roger Berman, former operator of The Sun in Lamb’s Conduit, who was credited with bringing real ale to London.

“I said to him, you must have a price rise strategy. He said, you might think that, but we’re just flying by the seat of our pants. There is an element of that.

“If you could sum it up, we’re trying to keep our price rises as low as possible. We’ve had to put them up by quite large amounts in the last year or two. We’ve still got a gap between us and competitors, which a lot of people in the pub trade won’t like, but that’s what we’ve tried to do.”

Though a big supporter of cask ale, the category is even more difficult post-lockdown according to Martin.

“People are creatures of habit, they didn’t buy cask ale in supermarkets, so its sales have been under tremendous pressure…

“You’ve got to keep cask flowing through the pumps, and that holds down the price.”

A recurring theme for the conference, Martin says he was taken aback by the rising popularity of Guinness in his pubs.

“It’s weird, because Guinness has always been the old boys drink and suddenly it’s taken off in a big way.

He says throughout his career about 80% of drinks volume has remained roughly the same, while 20% varies, and has often been sweet drinks over the years.

This has ranged from Diamond White, bottled Budweiser, Smirnoff Ice, alcopops, vodka Red Bull and Magner’s and Bulmer’ served over ice.

“The latest iteration is Guinness, which is so weird because it doesn’t fit the profile of the other trends in drinks. But you’ve got to be trendy, haven’t you?”

Political campaigning and the general election

During the Brexit campaign, Martin become something of a poster boy for leaving the EU, something he insists was not intentional.

This time round, he has avoided the political limelight and kept his counsel in regards to endorsing any political party.

“It’s quite funny because I never took part in a political campaign before the referendum, but I was asked when we came out in March 2016, and I said on the basis of democracy, I think we should leave the EU

“Somehow I got shot off into the into the stratosphere because most people were saying the opposite.

“This one I’ve been asked, and I’m reverting to my previous position in not supporting a political party. I’ve said I’ll support any party that supports tax equality!”