At the table with... Tim Martin

3rd March 2010, 12:07pm

It began with a dream to start a squash club but 30 years on JD Wetherspoon is one of the UK's most recognisable brands. Clare Riley met up with chairman, Tim Martin, to talk competition, smoking and the government.

Many people don't know that you studied law. How did you get the idea to start JD Wetherspoon?
There was quite an element of opportunism when it came to starting the business. I realized that I was struggling with law. I could do it but I could only understand it at half the pace of the good lawyers. I used to play squash and tried to start a club but I couldn't find any land or any finance so I was caught in this vicious circle. I was in Muswell Hill squash club one day and a chap at the bar said that someone had converted a bookies into a pub down the road. While I was still studying for the bar, I got to know the guy and ended up taking over the pub. It all started with an eight-year lease of a small pub in north London. I suppose it was chance but I did know that I'd start up my own business eventually.

What is it about the pub trade that you still enjoy after 30 years?
I like the pub trade because it's built for work. It's a natural thing to do and I've discovered that I'm happier working. When you've been running the same company for as long as I have, you build up this bond with the people who work there. The business is doing well and I think we've only reached half our potential so there's a lot to go for over the next few years. The other thing is customers like us and that gives me a buzz to go around the country and see that it's appreciated.

Wetherspoon has a really wide-reaching customer base. Why is that so important?
I think it's key to what we do. Our competitors have gone down the route, over the last 15 years, of brand segmentation. Instead of these little brands, we've always thought a pub works best when it acts as a place where a broad cross-section of people can go and socialise, just like you would in your house. That's what I think gives a pub a buzz when it becomes a bit of a melting pot. Because of the way other brands have segmented their pubs, it makes us slightly unusual when we try to appeal to both the old and the young. Even in our head office we keep things broad. We all make the big decisions. We have a 'Tell Tim' scheme where everyone who puts in a suggestion will get paid a fiver, even if it's a bad suggestion. They go onto the agenda of meetings and we went through 25 today alone. You can't make big, strategic decisions every week but you can make progress with small issues, which often lead onto big ones. By simply having a debate about these suggestions you increase the depth of knowledge within the company.

What are the major changes taking place across the pub trade?
The main change is more competition. Typically now for a Wetherspoon pub it'll have to compete with a couple of coffee shops, a PizzaExpress or two and increased competition from the supermarkets. For a pub now it's simply not good enough to be the best pub. It's got to be a pretty good coffee shop too. One of the other changes I've seen is with ownership. The pub trade used to be much more brewery dominated than it is now. So big pubcos have taken over from the brewers and I don't think one or two of them have made a terrific job of it to be honest. Food is served all day now and when you take into account that people will have a drink or two with their meals, it easily accounts for 60% of our business these days. It's massively important. Coffee and tea are important now too. We're doing half a million of those a year and we'd be in big trouble if we weren't selling those items.

Wetherspoon was one of the first chains to introduce no smoking. Why was that?
Innovation center I think forewarned is forearmed and if you can see something like nonsmoking and you can prepare for it, then you've got an advantage. That seems like a fairly obvious point but some pub companies just didn't do it. We actually called for the ban in the sense that if the government didn't do it we were going to go nonsmoking anyway. I felt that pubs were appealing to fewer people and I could see that pubs were getting cornered and gradually narrowing their appeal.

Is it fair to say then that you think the smoking ban is used as a scapegoat when it's quoted as a factor in the number of pubs closing across the country?
I think it is yes. Our sales are now above where they were before the ban and that's true of a lot of the other companies as well. I do think in some cases it has put pressure on the pub business but on the other hand it means that people who were rejecting pubs now go to them. I think what has really affected tenants and some managed houses, more so than the smoking ban, is the fact that pubcos have taken on so much debt that they are now charging very high rents and very high prices for beer and it's not leaving enough money for investment for the pubs themselves. The aftermath of the smoking ban created the need for capital investment in non-smoking areas and not all pubs have had enough money. That's the real issue.

There's a lot said about the government and its relationship with pubs. How much damage has been done?
I think they've done a lot of damage to the pub industry and I think they've been selfish towards the pub and catering industry generally because they're more concerned about themselves rather than the consequences of people who work in pubs and their customers. What they're trying to do is show that they're doing something about binge drinking, which the public are concerned about and it's quite right that they don't like it. But the government has decided it's going to show its taken action by cracking down on pubs. Whereas binge drinking is a cultural issue. Pubs can only do so much and it's not possible for us to control the full situation which arises.

Where do you stand on the issue of beer tax?
I think the tax in this country is generally through the roof. In our last year financial year, we paid around £400 million in taxes in some way or another, which is 10 times our net profit. For every £1 of profit the government takes £10 so there's only so far you can go with that and pubs are of course shutting down. The government's taxation and regulation strategy is playing a big part.

How do you feel about the supermarkets having 'free reign' on alcohol pricing?
In a way I think the supermarkets have got to do what they've got to do and I drink Old Speckled Hen bought from Tesco and I can't see why the people should pay more as long as they're behaving themselves. As the government whacks up taxes it does put more pressure on pubs and supermarkets so it means that more and more people are drinking 23p cider. I think the governments are on planet zog and they're out of touch. The whole policy is based on hypocrisy because they all drank when they were under 18 in pubs and they allow their children to drink underage in pubs and yet all the legislation is based on the hypocritical idea that everyone else will comply with draconian rules.

What could the government do to make life for the pub trade easier?
They could say 'We've increased taxes a lot and pubs are very well taxed. We'll leave them alone for a few years.' They could ease off on employment legislation, which appeals to voters but is paid for by businesses and I think the short answer is that they could do nothing for a few years to let people absorb what has already been done. They could also stop the entrapment policies, sending under 18s into pubs unsupervised simply to catch us out.

How do you feel about a minimum pricing policy for alcohol?
I'm not so sure that it's a good idea because I believe in the free market. It's difficult enough for us to set prices for ourselves so when the government starts to do it you have to ask 'Where does it end?' Giving them the freedom to decide whether they charge £4 or £10 a pint is a bit too 'Big Brotherish' for me. There's no indication that for the couple of weeks in January when we do our sale that there's trouble in our pubs. People are pretty well behaved. A lot of people don't have money in January and so I think it's a pity if they can't have a pint of bitter for 99p. It's still double or even triple the price of what you'd pay in Calais or Tesco.

Who within the industry do you admire?
The nearest to what we've done is Pizza Express when it was run by David Page, which started off as one franchise, but he ended up being chairman of the com