By Andrew Saunders Wednesday, 01 February 2012

The MT Interview: Tim Martin

The outspoken and down-to-earth founding boss of JD Wetherspoon is opening 50 new premises a year. But, it'll be an uphill struggle to reach his target of operating 1,600 pubs across the UK unless he can get the Government to cut taxes for the on trade.

There's a reassuring sense of permanence about Tim Martin that is at odds with our turbulent age. It's partly physical - at six foot six and weighing 18 stone, broad-shouldered and with hands like hams - JD Wetherspoon's 56-year-old founder is built like the proverbial brick outhouse. But it's also a consequence of his everyman persona - the veteran landlord projects the easy bonhomie of one who's happy to chew the fat with lords and commoners, and is equally interested in both.

Similarly durable are his awful clothes. Today, he is cheerfully style-free, as usual, in jeans and a sweatshirt that looks as if it might have been part of a bulk purchase in the Blacks bankruptcy sale. He carries a market-stall sports bag of astonishing disreputability. Even his legendary hair - the trademark shaggy grey mullet - is cut as it was when he was a teenager, although since being compared to Peter Stringfellow he keeps his locks a touch closer-cropped.

The overall impression is of someone who cheerfully resists change for change's sake. Take his attitude to the euro. Unlike those for whom the single currency's recent slide into disaster has meant a hasty volte-face, no one can accuse Martin of changing tack. He has been a fervent Eurosceptic from the off. 'The euro has had a 15-year denouement, but you can hear the Niagara Falls roaring now,' he says. 'If you're going to have a single currency, you need a single government.'

He isn't entirely unhappy at the way events have proved him right and has just introduced a specially brewed Veto Ale to celebrate David Cameron's use of the British 'no' vote in Brussels before Christmas. It's the latest in a long line of such stunts - he famously got into hot water with the corporate governance police for spending £40,000 of company money campaigning against the UK's entry into monetary union in the noughties. Efforts that included the printing of 500,000 'No to the euro' beermats.

The end of the euro is well and truly nigh, he believes, and if the powers that be in Europe could only grasp that fact then things might get better much more quickly than all the 'experts' seem to expect. 'Economists know fuck-all about economics, that's the thing. If it is going to collapse, it would be better just to get on with it - creative destruction. When Argentina defaulted on its debt and when Britain left the Exchange Rate Mechanism it was the start of recovery.'

However, despite the collective tightening of belts and drawing in of purse strings of the past few years, JD Wetherspoon is doing all right if its latest results are anything to go by. The firm has just broken the billion pound mark for the first time, with revenues of £1.072bn for 2011 up 7.6% on the previous year.

But then Martin's no-nonsense recipe of good beer, cheap prices and plenty of room to sit and chat has always confounded those critics who claim that the British boozer teeters on extinction. Barring one or two small glitches, his turnover and profit have both been rising for years, a fact he's proud enough of to celebrate in a historical results table in the annual report (although margins are falling - down from 9.5% to 9.3% in Q1 2012). 'I got that idea from Warren Buffett. Just don't put his results next to mine. Hrr Hrr!' A big fan, Martin has even offered the Sage of Omaha a bar job after he retires.

But despite his readiness with a gag and that 10-digit landmark, Wetherspoon's success is increasingly hard won. The UK licensed trade is in a parlous state after years of pub closures - a steady rate of 25 a week, according to the British Beer & Pub Association, or 1,300 a year if you prefer. Squeezed by the triple whammy of loss-leader supermarket six-packs, stiff competition from bars and restaurants and ever-rising taxes, drinkers have been abandoning their locals to drink more cheaply at home, calling into question the pub's once unshakeable place at the heart of British social life. There are exceptions - Wetherspoon's is one, Greene King another - but Martin acknowledges he is having to work harder and harder for every penny he earns. 'In one way it feels amazing to be doing a billion pounds, but it also feels like a lot of turnover for a pretty modest amount of profit,' he says, sipping a coffee in The Metropolitan, his pub above London's Baker Street tube station. Even at 10.30am, the gilt- pillared interior boasts a mixed bunch of punters, from laptop-toting suits to a guy in trilby, fur coat and Ray-Bans, straight off Starsky & Hutch.

'On the wall of my office I've got a picture of Sisyphus pushing his boulder uphill. That's what running a pub is like, for everyone not just me,' says Martin. 'You can't sit back and say: "Oh what a clever boy am I," or it's good night, Irene.' He's got a point - pre-tax profit for 2011 was £61.4m, hardly a stellar margin on such a big chunk of revenue and only 1.5% up on the previous year. The size of his tax bill - a whopping £450m last time around - is another constant bugbear. That's 45p in tax for every £1 in profit - the comparable figure for Barclays Bank is around 25p. So why does he stick at it? 'Because if you push the boulder uphill for eight or 10 hours a day you feel justified in stopping for a pint or two at the end of it.'

By that measure, he has earned quite a few lotions since he opened the doors of his first pub, Martin's, in Muswell Hill in 1979. JD Wetherspoon is now the UK's largest managed pub chain, with 840 boozers, and he's forging ahead with growth. He opened 50 pubs last year, plans to do the same this year and should hit the 1,000 pub mark by the end of 2014. But not everyone in the leafier parts of the country appreciates a Wetherspoon's coming to town - when he opened up in Tunbridge Wells, one resident went on hunger strike in protest.

In fact, the rate at which other pubs have been closing has been an opportunity to acquire ready-made licensed premises, something that used to be very hard to do. Hence the classic 'Spoons: a giant pub in a converted bingo hall or cinema. 'It used to be that we had 5% existing pubs; now it's more like 30%.'

It is his long-held ambition to own one pub for every 40,000 of the UK population. Whether he makes it to the 1,600 or so pubs that this implies or not, it's characteristic of his long-term approach to business. For example, he likes to get his hands on freeholds. 'Freeholds are important, although you can't always get 'em. The businesses which are sustainable in the long-term in pubs and in retail are the ones with freeholds. Shepherd Neame (Britain's oldest brewer, dating back to 1698) wasn't built on leaseholds. Nor was Tesco.' However, a harsh Budget next month could put a dent in those expansion plans.

Ah yes, Tesco. Wetherspoon's aggressive expansion - and Martin's oft-voiced admiration for big retailers such as Wal-Mart and the Archie Norman-era Asda - has attracted unflattering comparisons with Cheshunt's finest. But he brushes off critics who claim Wetherspoon's, like Tesco et al, can damage local trade. 'Tesco has improved my quality of life by opening a store near where I live in Exeter,' he says. 'We only had a Spar before.

'I don't think there's any evidence more pubs close when they are near to a Wetherspoon's than when they aren't,' he says. 'In London, we've got 150 pubs. If you'd asked Fuller's and Young's what they thought of us when we started they certainly wouldn't have welcomed us. But now I think they'd say: "We've learned how to compete with them and they don't frighten us.' It's thanks to healthy competition, he says, that Britain's pub scene is the best in the world.

When it comes to competition, Martin has firm views about who the good guys and bad guys are. There are twin evils in his world, the first of which is the Government and what he sees as its increasingly hostile attitude towards the licensed trade. 'The main thing is that pubs pay 20% VAT on food - which has had to become a big part of the business - while supermarkets don't. That's what makes the economics of going to the pub for customers and of running them for pub companies so expensive and that's what has to be corrected.'

The publican's other evil are some of his rival pubcos, whose troubles, he believes, are firmly of their own making. 'They were cynically managed by greedy bastards,' he says levelly. 'They always seemed to me to be more interested in cosying up to the Government than running their businesses.'

He's talking about the Spirits and Punch Taverns of the world, whose modus operandi in the boom years was to treat the game as a leveraged property play, racking up debt to buy more and more bricks and mortar with the assumption that, thanks to the rising property market, whether the pubs themselves were actually any good didn't really matter much.

When the market tanked instead, things got very ugly very quickly. 'They hold some responsibility for all those pubs which have been closing, yes. I had a massive go at Hugh Osmond (ex-boss of Punch Taverns). I called him a Vichy-style collaborator and I also said that if the Government wanted to take advice from an Osmond it'd be better off talking to Donny.'

Martin delights in recalling the famous names who have been on the sharp end of his tongue over the years. Even Richard Branson doesn't escape. 'I came up against him once on Panorama. He was pro-euro but he was barracking me when I was trying to speak, so I said: "Hang on, Richard, you're not in charge now."'

That subterranean chuckle again, he's not finished skewering old beardy yet. 'He's got the brass neck to say: "We've got this amazing brand," but how good is it really? When he tried to create Virgin Cola, he phoned me up to ask if we wanted to sell it in the pubs. I was amazed that it was him on the phone, but who wants Virgin Cola? No one.'

He reckons his tussles have all been in a good cause and he doesn't make a habit of picking fights. 'I don't fall out with people day to day, I don't fight with cab drivers or in restaurants, I've got enough problems.'

Born in Norwich in 1955, he had a nomadic upbringing as the family followed his father's job across the globe to Northern Ireland, New Zealand and then back again, attending no fewer than 11 schools. His dad had been a fighter pilot before medical issues forced him to take a job as a Guinness rep, aged 29. 'It was quite a demotion in his eyes, but he went on to become the marketing director for Guinness in Malaysia, a very good job. He was really persistent and stuck at it.'

Martin, who retains an East Anglian burr, admits to a streak of arrogance and says it was evident in him from an early age. Take the time he ran away from school: 'I was very individualistic. When we were living in New Zealand, I was sent away aged 13 to a boarding school 250 miles away. My dad took me but I only stayed one night. I hitchhiked back and got home before my old man did!'

Back in Blighty, he studied law at Nottingham University and early jobs included working in a pork pie factory - 'I quite liked that' - and as a newspaper ad salesman. But it was the state of the pubs near his home in north London that was to provide his seminal moment. 'The keg beer they served was terrible. I used to head south of the river to drink Young's Special and Fuller's ESB. If there had been pubs near me like the ones in Nottingham when I was a student, I probably would never have started Wetherspoon's.'

Having taken on the lease of that first Muswell Hill boozer more or less on a whim, he discovered that there was a lot more to it than there appeared to be from the other side of the bar. 'I was 24 and I became a landlord, a really bad one. I was willing to learn but it was a fiery crucible. By year three, I had just about learned how to run a pub.'

By 1992, when Wetherspoon's floated on the London Stock Exchange, he had 44 pubs. (The name, by the way, commemorates a schoolteacher, Mr Wetherspoon, who said he'd never make it in business, and the JD Hogg character in the 1980s TV show The Dukes of Hazzard.) The shares increased 10 times in as many years as Martin made a name for himself as a young man in a hurry in a staid old sector.

Never one for lobbying when there was competition to beat, while others griped about 2007's ban on smoking in public places, Martin simply got on with it. He surprised everyone by introducing his own no-smoking policy a year ahead of the legislation, turning to food (including breakfast and pensioners silvertop specials) to bring in fresh punters to boost midweek trade.

His willingness to try new things plus relentless focus on value - remember the 99p pint? - coupled with a relatively modest appetite for debt meant that when the crash hit in 2008, Wetherspoon's was better placed than most to carry on growing. 'We do have a reasonable amount of debt, around £500,000 per pub, but that's not much compared with some of the others.'

Food remains important to the business today - although it's more Gregg Wallace than Michel Roux Jr. The share price, alas, seems to have hit the buffers, stuck at around 450p for the past five years. Still, in comparison with many in the trade, that's a great achievement, and Martin doesn't seem too bothered. He'd rather keep his people happy (Wetherspoon's pays out 25% of its profits in bonuses, 90% of that to the pub staff) and punters coming through the doors than pander to the City, anyway.

Even after nearly 35 years in the business, he still loves pubs. Although he brushes off attempts to analyse his personal contribution to Wetherspoon's success, he admits this has probably got something to do with it. 'I noticed in the early days that not everyone in this business likes going to pubs. I do, and that's a big help.' In fact he's slightly obsessed. 'I wake up at 3am with new pub ideas. There probably aren't many people in the world who think about pubs as much as I do.'

Since becoming non-executive chairman in April 2004, when he's not thinking about pubs he's visiting them, spending at least a couple of days a week crisscrossing the country. That may sound like a pretty cushy number but the way he does it, it's a serious business. 'I'm off to Liverpool and the north-west now,' he says. 'I'll visit the pubs there, talk to the staff to get some ideas and try to project my personality. It's important to get out and about.'

He carries a notebook into which his observations are assiduously entered, from the shine on the brass at the bar to the quality of the beer, the warmth of the welcome to the froth on the cappuccino. The pubs reflect his own taste but everyone gets a shout, he says. 'Pubs need individuality: the personalities of the staff and the management have to be reflected.' Everyone can put forward their ideas, either in person or via the staff suggestion scheme, Tell Tim.

What about that 'Disgusted of Tunbridge Wells' hunger striker, and all the others who claim his pubs are a bit low-rent? 'We're the number one seller of Pimm's in the world. How can we be downmarket?'

After the fieldwork, it's back to HQ in Watford for what does sound like a genuinely arduous session, starting with the so-called Big Meeting. 'I copied it off Wal-Mart, half a dozen pub managers and area managers plus someone from every department. We hack through all the Tell Tim suggestions and call notes deciding what we will and won't implement. There's usually 50 or 60 pages to read. Then after that I have more meetings with pub and area managers plus all the other standard meetings you have to have.'

Like many consistently successful entrepreneurs, he is relentlessly frontline focused. 'I don't save time for strategy per se, because our strategy has never really changed. Improve the pubs we've got, boost their sales and profits, and then build more of them. It's the implementation that takes the effort.'

It's clear he thinks his senior people, including chief executive John Hutson, are grown-up enough to look after themselves, and the Wetherspoon's board is not only self-sufficient but it's also got an even gender balance, with women in three of the seven positions. A happy accident, he says. 'Guys, as Jimmy Savile used to say, are very different from gals so it's good to have ideas from both. And 50% of our employees are female.'

He's no fan of 24/7 communications technology and has a typically single-minded way of dealing with it. 'I don't have a BlackBerry and I only do my email once a week, in the office. The rest of the time, people can text me. I can deal with work things at work but I don't want things coming through at nine o'clock at night. It puts my blood pressure up and interrupts my thinking time.'

With his wife of 36 years, Felicity, Martin lives in the west country. They have four grown-up kids: one is at university and three are working, but not for Wetherspoon's. 'Family businesses are good for the economy but I don't regard my company as a dynasty. The idea of my kids inheriting loads of money always made me uneasy.'

Despite his wealth - he owns 24% of the business and is worth around £152m - he lives a pretty modest lifestyle, no globetrotting holidays or second homes. 'I don't have a yacht but I do have a surfboard and I like to travel first-class on the train. I've always driven a Volvo and it's nice to be able to have one that isn't on HP.

'I'm no Spartan but I don't understand the hedge-fund type of money. It's better to be on the same level as everyone else. If you buy a big estate with a hundred acres - and I have tried this - it's an isolated existence. It's more fun to be part of the mainstream human race.'

It's a refreshing sentiment and one many of his punters would happily raise a glass to. One thing's for sure - he's not spending all that dosh on clothes and haircuts.

THREE CHALLENGES FACING MARTIN

  • Campaign successfully for a reduction in VAT for the pub trade

  • Achieve his goal of owning 1,600 pubs before he retires

  • Treat himself to some decent clothes and a new bag

 

MARTIN IN A MINUTE

28 April 1955 Born in Norwich. Brought up in Northern Ireland and New Zealand, attending 11 schools, including Campbell College, Belfast. Studies law at Nottingham University.
1979 Abandons the law to run his first pub - Martin's in Muswell Hill, north London.
1992 JD Wetherspoon floats on the London Stock Exchange, with 44 pubs to its name.
2002 Prints 500,000 'No to the euro' beermats as part of a campaign to keep Britain out of the euro. Now has 540 pubs.
2004 Becomes non-executive chairman.
2011 Breaks the £1bn turnover mark for the first time. Opens his 823rd pub.

 

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