J D Wetherspoon PLC

Telephone:

01923 477777

Activities:

JD Wetherspoon is an operator of managed pubs and is also a player in the budget hotel sector with its Wetherlodge inns with rooms. The Wetherspoon pubs take a “real ale no jukebox” approach while the Lloyd No brand is entertainment-led.

Brands: Lloyds No 1

Chief Executive:

John Hutson

Key People:

Finance director: Jim Clarke
Commercial director: Suzanne Baker
Non-executive chairman: Tim Martin

Commentary:

Martin opened his first “real ale, no jukebox” pub in Muswell Hill to reflect the sort of pub he wanted to drink in locally but could not find. Its successful expansion is credited with changing the face of pub retailing at a time when many operators were more focused on brewing than on pubs.

Wetherspoon’s offer is based on low prices, no music or TV, large no-smoking zones, facilities for the disabled, and a strong food offer that is kept on its toes by regular inspections headed up by food critic Egon Ronay. Lloyds No 1 adds a second and very different string to the company’s bow as the entertainment-focused brand offers music and dance floors in city centres.

The company has a good reputation as an employer and was one of the first pub groups to introduce a 48-hour week (in 1995) – ahead of legislation and at a cost of £2m in profits. It provides good quality staff accommodation, training at accredited colleges, and has many of managers who started as bar staff or cleaners.

The group has grown by cherry-picking premises (often unlicensed ones) rather than corporate acquisitions and its expansion has until recently been matched by consistent growth in sales and profits. However, Martin’s new backseat role and a fall in interim profits to March 2005 has rattled the city, while a series of share buy-backs have prompted rumours of a management buy-out (which the company refutes).

Faced with growing competition and spiralling labour an utilty costs, Wetherspoon’s has cut its expansion programme from 50 pubs a year to just 15 for 2005 and scrapped plans to move into the Irish Republic. 

Despite the recent cooling in City attitudes towards the group, JD Wetherspoon was named the second most respected pub and restaurant business (after Greene King) in the peer-reviewed Britain’s Most Admired Companies 2004 rankings, and was listed 21st in its pan-industry top 220.

The group’s pledge to ban smoking in 60 pubs by May 2005 and across the whole estate by May 2006 (two years ahead of Government regulations) has been delayed by the necessity of revamping the kitchens first. This strategy was driven by the realisation that banning smoking depressed beer sales but increased food consumption.

Strategy:

"Like-for-like sales in February 2006 increased by 1.9%, in comparison with a decline of the same amount in February 2005. Profits and cash flows continue to be enhanced by the cost reductions outlined in our results announcement of 4 March 2005. The imminent Scottish smoking ban, combined with the potential impact of the football World Cup in June and July 2006, leads us, as previously indicated, to take a cautious view of the possible outcome for the second half of the current financial year.

Source: interim results statement, March 2006

Operating Data:

Total number of pubs: 654 (including 70 Lloyds No 1)

Number of Wetherlodge pubs with letting bedrooms: 11, with 315 bedrooms (in Birmingham, Brigend, Chesterfield, Glenrothes, Henley on Thames, Inverness, Kings Lynn, Monmouth, Salisbury, Shrewsbury, Wigan)

Number of employees: 16,000

Food as a percentage of turnover: 25% (40% in non-smoking venues)

Financial Snapshot:

Full year
Turnover: £809.9m (2004: £787.1m)
Pre-tax profit: £38.7m (2004: £46.3m)

Half year
Turnover: £406.3m (2005: £403.3m)
Pre-tax profit: £27.4m (2005: £22.6m before exceptional items, £14.6 after exceptional items) 

Financial year end: 24 July 2005
Half-year end: 22 January 2006

Address:

PO Box 616

Watford,

UK