One in six British pubs has closed since the early years of the new millennium. Well over 10,000 outlets, through a welter of pressures ranging from cheap beer sold by supermarkets to the smoking ban, alcohol duties, rising energy costs and higher wages – the latter just ratcheted up through the introduction this month of the national living wage.
But Tim Martin, the outspoken chairman and founder of the 950-outlet JD Wetherspoon pub chain, believes another more unquantifiable pressure is gaining traction. Namely, a rising number of a cash-poor and screen‑living younger generation losing the pub-going habit.
Martin says: “There is a link. It seems that people who use social media a lot feel less need to socialise. Many tend to be students and you have a grand impoverishment of our students, what with tuition fees, etc. That’s bound to affect pub sales and other types of consumption. I did not leave university with £50,000 of debt.”
On a lighter note, he tells the story of returning to his home in England’s West Country one time to find his son and friends playing on consoles and drinking supermarket beer. “Why don’t you sod off down the pub?” dad said.
It segues to a hobbyhorse of Martin, what he has repeatedly claimed is an “unlevel playing field” with supermarkets that can use their VAT-free food sales to subsidise their take-home beer offering and undercut pub prices.
By contrast, JD Wetherspoon and its pub peers pay 20 per cent VAT on their food sales, no mean amount when food now accounts for nearly 40 per cent of group revenues.
Martin, who still owns 28 per cent of the business he founded as a 24-year-old in 1979 with one pub in Muswell Hill, north London, says: “It’s hard to quantify financially, but you cannot isolate such issues. We have this tax inequality between us and the supermarkets at the same time as social media is becoming ever more established. All the factors add up to put pressure on pubs.”
Last month Wetherspoon unveiled a 4 per cent fall in half-year profits to £36 million, which it largely attributed to extra staff costs for its 37,000 headcount.
Never afraid to tilt at totems, the Wetherspoon boss is scathing about what he believes was Chancellor George Osborne’s motivation for the new national living wage for over-25-year- olds, which will go up to £9 by the end of this parliament.
“(Osborne) was simply shooting from the hip to make himself Prime Minister,” Martin says. “It was decided over a couple of pints of beer at Chequers one weekend. How can we make George Prime Minister in five years? It was a way of him getting kudos (with the public).”
Obviously alive to the potential PR damage of possibly being seen on the wrong side of the populist argument for the living wage, he adds: “I’m worried about the extra cost. But we pay 40 per cent of our profits out in bonuses to our staff, equal to about 15 per cent of pay for managers and 5 per cent for other employees. I would suggest that shows good intent.”
Despite the pub sector pressures, Wetherspoon’s founder knows the chain – no music, no pool tables, low prices, serious buying power with suppliers – is in good health. Like-for-like sales increases on last year are running at about 3.7 per cent, which many in the sector would envy, with the average outlet taking £38,400 per week.
Given the business’s strength and the City’s legendary short-termist outlook, in the past Martin has been asked whether he would take the business private again. But he laughs: “I don’t want to own it entirely. I would have to pass it on to my son or one of my daughters to run and that would be a hospital pass.”
Some have argued that the leisure trade, which relies heavily on younger, lower-paid staff, protests too much about the living wage. They say consumers will have more money to spend on enjoyment. “There may be an element of that, people having more money in the pub, but I don’t think it will cut much ice in Port Talbot, Cambuslang or Scunthorpe (centres of the crisis-hit, jobs-haemorrhaging steel industry),” Martin responds.
Which takes us on to controversial zero-hour contracts, where employers are not obliged to offer staff minimum working hours, and staff are not obliged to accept what is offered.
The Wetherspoon chairman defends them, claiming they suit the fluctuating customer demands of the trade. “We have admitted using zero-hour contracts, but many other pub companies have not. They cannot possibly operate without something like an hourly paid system. It suits the industry, and a lot of people who work in it. And if on the wider level you want a flexible labour market, which has its advantages in terms of low unemployment, there has to be an element of varying hours, say between different consumer demand in December and January.”
Martin is a big character in every sense. Six foot, six inches tall, invariably casually dressed, and with something of a 1970s-style mullet haircut, it is easy to espy him when we meet at a Wetherspoon bar virtually over London’s Baker Street station.
He is bloke‑ish, Mr Everyman in style, very approachable. But he is more nuanced than that. Martin qualified as a barrister before being called to a different type of Bar, and quotes Shakespeare. He has described the pub industry as “Sisyphean”, after the mythological Greek king condemned eternally to roll a large stone to the top of a hill, only for it to roll straight back down again.
Martin also doesn’t do marketing jargon. How do you get a pub business right? Ask the staff, particularly the pub managers at the rockface, and use their best ideas, he says. A recent example is Wetherspoon ditching its Sunday roast meals nationwide because kitchen staff said it was interfering with the quality of breakfast offerings on the company’s busiest day of the week for the latter.
“We don’t dream this stuff up, it is a case of small adjustments. I visit ten of our pubs a week, sometimes double that, and shoot the breeze with the manager,” Martin says.
Wetherspoon has expanded strongly in Scotland since the mid-1990s, with about 70 outlets now, including The Playfair in Edinburgh, Elgin’s Muckle Cross, and The Robert the Bruce in Dumfries. “We have had a good reception in Scotland, more than a fair crack of the whip from the public, the courts and the local authorities,” Martin says.
In the bigger picture, he is sanguine about the sector’s prospects, but for the first time since its 1992 flotation on the stock market, Wetherspoon has revealed it might close more pubs than it opens this year.
He also appears to be rowing back on forecasts some years back that the company could eventually expand to 1,500 UK pubs. “It varies according to your mood and the tax regime. I would say that I’m now aiming for between 1,000 and 1,200,” he notes.
It wouldn’t be Martin if we didn’t also touch on what he believes are elitist, out-of-touch politicians again. He is one of the highest-profile British businessmen backing a Brexit from the EU – feeling vindicated that he made the right call in campaigning against us joining the euro in 1999.
“Too many of these politicians have been loved since they were aged four, top of the class, they have been told they are brainier than anybody else, and then they find they only have the same vote as the riff-raff. They like Brussels and are pre-disposed to the EU.”