How much more room is there for JD Wetherspoon’s pubs on British high streets?
The fewer sales you have, the more profit you need to make on each to make ends meet. Conversely, if you cut margins and compete on price, you need not only to sell more but to have the scale to maintain your price leadership.
JD Wetherspoon has scaled up the traditional pub in recent years, although it has just announced that it may scale back its 2012 expansion plans in the face of “punitive” tax increases introduced by government. This pre-emptive strike, as a way of influencing government policy, probably won’t achieve much.
“There’s never been pub closures like the ones over the last few years, and if nothing is done the trend of people going to supermarkets will continue,” said Tim Martin, Wetherspoon’s chief executive and founder. He is also, rather brilliantly I think, the big man (he’s 6 feet 4 inches tall) who named his company after the school teacher who told him he wouldn’t amount to much.
The company, which has 834 pubs across the UK, has long been a vocal critic of the above-inflation rise of beer duty as well as the “disparity” in VAT between supermarkets and pubs. It argues this difference allows supermarkets and off-licences to sell cheaper alcohol than pubs can.
The stream of closures of the smaller village pubs that Samuel Pepys once called “the heart of England” has been steady now for many years. The British public has been increasingly drawn to big pubs with low prices for both beer and food. However, not everyone puts price, the delights of drinking with many hundreds of other people or being able to have a pint of lager with your breakfast at the top of the list of reasons why they go to pubs. Many would rather socialise with familiar and friendly faces at their local and pay a little more for the privilege. Thankfully, like all markets, the pub trade is segmented too.
There are still just over 50,000 pubs in the UK, so Wetherspoon has about a 2 per cent share by number, but a much higher proportion of the market by sales: its pubs are large and, with their central locations, highly visible. In spite of their apparent ubiquity, Martin still believes there is room for more big pubs on our high streets and he wants to double the Wetherspoon’s estate over time to 1600 pubs. At a rate of 50 a year, that will take a couple of decades, by which time the UK high street may look very different.
With the slow death of our high streets what will we have left around the average market square? Will UK town centres become adult playgrounds rather than shopping streets? Just coming alive at night as thousands of Tim’s customers decant from big pubs after drinking big beer. Will pound shops, living accommodation and more and more of Tim’s pubs take over the high street?
I hope not.