The government’s ‘duty escalator’ usually hikes up the tax on beer by 2% above the rate of inflation. It would have been disastrous for Wetherspoons’ margins – they’ve already shrunk from 9.3% in the first quarter of last year to 8.4% ish in the last, mainly down to competition from supermarkets, the ongoing downturn, and stiff competition from snazzy bars and clubs. Indeed, despite the brief duty respite, it’s still tough to make a crust, even as one of the nation’s more successful publicans.
Speaking exclusively to MT in a recent interview, Sir Martin admitted that spiralling supplier costs and massive taxes were an ongoing struggle for the firm. ‘On the wall of my office I've got a picture of Sisyphus pushing his boulder uphill,’ he said. ‘That's what running a pub is like.’
Out of every pound Wetherspoons makes, 45p goes to the Treasury (the comparable figure for Barclays Bank is around 25p). So why does the Wetherspoons’ founder bother to get up in the morning? '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,’ he quips.
And Martin has a few achievements to drink to this quarter. Operating margins at the chain have increased 0.2% to 8.5% year-on-year for the 13 weeks to 28 April, while like-for-like sales are up 6.3% year-on-year for the quarter. Total sales have jumped 9.3% year-on-year including new-pub openings.
While beer association Camra estimates that 26 pubs went out of business each week between September and March, Wetherspoons has managed to open 16 since the start of the financial year. This year, Martin intends to open a further 30 pubs, and another 20-25 in 2014.
So, what’s Martin’s secret recipe for success? ‘It’s the thousand components,’ he says opaquely. ‘We’re trying to work on the nuts and bolts and get a small advantage. Sir Dave Brailsford [head of the Tour de France-winning Sky cycling team] calls it the ‘aggregation of marginal advantage’ – it’s a bit poncy, but it’s what counts over the long run.’