Saturday, 16 May 2015

Pride before a fall?

I recently wrote about the travails of Tesco, which had expanded beyond the point at which the business was sustainable, and raised the question as to whether the same fate might eventually befall Wetherspoon’s.

Love them or loathe them, Spoons have been the great pub success story of recent years, proving that even in a declining market you can still thrive by giving customers what they want. I’ve written about the reasons behind their rise here.

They still seem to be going from strength to strength, with a solid programme of new openings in the pipeline. They reckon that their ultimate goal is about 2,000 pubs – twice as many as they have today – which would mean that few people in the UK would not be within easy reach of a branch.

It hasn’t been a seamless ascent, though. Over the years they have encountered a number of setbacks, for example

  1. in the late 90s becoming too closely associated with the “night-time economy” in major cities
  2. jumping the gun on both full measures (which never happened) and the smoking ban (which, sadly, did), both of which alienated customers
  3. more recently, trying to push prices up in some branches in more prosperous areas and meeting much customer resistance
They have also made a number of errors in site selection, most notably the Edwin Chadwick in Longsight which even I would have warned them about. However, the juggernaut keeps rolling on.

I do wonder, though, whether they are now running into the same problems as Tesco – diminishing number of suitable new sites, and the risk of new openings cannibalising trade from existing venues. There are plenty of towns – such as Preston – where one Spoons has recently become two.

I’m not saying they’re anywhere near banging their heads against the ceiling, but that day must come. Tim Martin has just turned 60, and won’t be around forever. Some have suggested that the company depends on his personality holding it all together.

But my recommendation as to when to sell the shares would be on the day they make a public announcement that they are going to segment their pubs between different categories. It may seem to make commercial sense, but it will undermine the whole concept. The fact that a Spoons is a Spoons wherever you go is, to my mind, their USP.

15 comments:

  1. The new Preston Spoons (The Twelve Tellers) seems to have progressively fewer customers in it every time I go. The older Spoons (The Greyfriar) doesn't seem to be suffering much as far as trade goes.

    Though I mainly go to the new Spoons on Monday afternoons, and it's location is Preston's hub of it's...erm..."nighttime economy ".

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  2. Do 3 Robbinsons/Hydes/Lees/Holts pubs in a row cannibalize each other?

    It is rare to see 2 Spoons near each other, and most towns have enough trade to support several dotted about. Look how many MacDonalds there are.

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  3. Robbies' pubs don't cannibalise each other because, unlike Spoons, they don't all have the same offer. Plus in general they're much smaller.

    Having said that, Robbies have thinned out their estate in places where they clustered thickly on the ground. And I don't think Greene King would open a Hungry Horse within a couple of miles of an existing one.

    Yes, there are loads of McDonalds, but there's plenty of evidence from the USA that they've been cannibalising each other. Clearly there still is plenty of scope for Spoons expansion, but the point will come when they have saturated the market.

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  4. Your conclusion is bang on. They did used to have two pub "brands" however - Lloyds No.1 and plain JDW

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  5. Wetherspoons Express could work: less choice, but quicker service.

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  6. They still trade as Lloyds No.1 in Newcastle at The Quayside. Probably one of the more characterful Spoons located in a very old former quayside warehouse with a cracking riverside view. Newcastle city centre is now graced with five of them though.

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  7. Livingston has a 'spoons and a Lloyds directly opposite each other at the entrance to a shopping centre. I would see one way of expansion as opening more Lloyds, especially as "night-time economy" venues. Maybe we'll see 'spoons that only open in the evening or conversely, ones in business districts which close in the evenings.

    'spoons Express, like airport bars escaped into the wild, could be another option; they might even be positioned as no-cask craft bars.

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  8. They still do maintain the Lloyds No.1 sub-brand, although sometimes the distinction between the two isn't very clear. Going back some years the two even had slightly different menus.

    In Shrewsbury there are two branches within 100 yards of each other - the JDW Shrewsbury Hotel and the Lloyds Montgomery's Tower - which are very different in terms of decor and atmosphere.

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  9. Martin, Cambridge18 May 2015 at 19:21

    A quiet Wetherspoons is a relative concept e.g. The newish Glossop one has had 15-20 customers on late afternoon and breakfast visits, which can look less than bustling but still busier than other venues.

    I agree about 2000 being ambitious; would mean a lot of doubling up and openings in marginal towns. On the other hand they continue to be pretty much the default option for travellers (e.g. City fans in Neath and Swansea yesterday) after both decent beer and breakfasts.

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  10. One day all pubs will be Spoons. What's the point of pubs that aren't spoons? The day will come.

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  11. I've mused in the past that they could look at a "Spoons lite" concept with a more limited food offer for locations that wouldn't support a full-on Spoons.

    I also get the impression that in some locations Spoons are rather crowding out other pubs in attracting food trade. Phil reports on his blog how he struggled to find any pubs apart from Spoons serving food on his Mild Magic forays. Mind you, any urban pub without the nous to display a menu outside doesn't deserve to succeed.

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  12. Mudgie, a number of smaller, wet-led Spoons do have a more limited food offer, both the size of the menu and the service times.

    They also tried yet another kind of Spoons which had different branding and prices (more upmarket/expensive and downplaying the fact that its a Spoons) and a different food menu. I think some of these still exist e.g. Rocket in Putney.


    Don't know about a caskless Spoons lite, but I would favour officialising the Spoons PLUS concept for their caskcentric pubs - Babington, Crosse Keys etc.

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  13. @Ben - I'd be interested to see a few examples of Spoons with a more limited food offer. Do they tend to be in London? I've been in plenty of Spoons but never come across this.

    I've also heard of this more upmarket sub-brand but again may be mainly a London thing.

    I'm not suggesting a caskless Spoons lite, but maybe one with Ruddles, Abbot and two guests could work on many suburban high streets where a full-service Spoons wouldn't.

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  14. The future is Greggerspoons: jumbo sausage roll and a pint of Abbott, together at last.

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  15. @Mudgie Yes, think it's mostly a London phenomenon in London, though I vaguely remember seeing it somewhere in outer Birmingham too.

    From memory Tooting, Mitcham, Dagenham, Brixton, East Ham and Eltham all have/had the small menu, as well as the cheapest beer in London Spoons.

    There is also a different menu in some of the central London Spoons with fewer fried food options and more things like flatbreads (at one point there was a small number in town that did no chips or any fried food at all).

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