Thursday, 2 July 2015

Selling off the silver?

Given that Wetherspoons still only run about two per cent of all the pubs in Britain, some people have been known to express surprise at the prominence given to the company in online discussions about beer and pubs. It sometimes seems that Spoons is the only subject that provokes much discussion on the CAMRA Forum.

However, given the large average size of their pubs, they’re probably in sales terms the biggest single pub operator in the country, and they’re certainly the biggest retailers of real ale. They’re also intimately bound up with CAMRA through the members’ discount scheme and, unlike other pub operators, they have a pretty standard offer across their whole estate and are often seen as a bellwether of industry trends. So it’s hardly surprising they get the attention they do.

While their overall success seems to continue unabated, they’re always churned their portfolio to some extent, in some cases because they’ve acquired a better pub nearby, in others because the location did not prove as profitable as they hoped. I’m not aware, though, that they’ve ever put on sale a batch of twenty pubs, as they have this week, mostly in London and the South-East. Although I’m familiar with the location of the one in Lichfield (pictured), I’ve never actually drunk in any of them, so I can’t really offer any personal perspective on the reasons for their lack of success.

From comments made by others on Twitter, they seem to fall into four broad categories:

  1. Towns that are fertile ground for Spoons, but where they have a better-located pub, such as Lichfield and Newport, IOW
  2. Places which are mainly dormitory towns and haven’t in the long run offered sufficient footfall to make a Spoons viable, such as Sevenoaks and Haslemere, both of which have been in Spoons’ hands since before 2000. Paul Bailey has written about the Sennockian here
  3. Greater London locations where there are other branches nearby
  4. Locations in purpose-built shopping centres where the amount of evening trade may be limited
I don’t see this as signifying that Spoons are faltering in any way, just that they are doing the kind of assessment of their operations that any successful business should. Indeed, in the days before the Beer Orders, brewers of all sizes often hung on to pubs when they were no longer viable because they gained a degree of status from the size of their estate. Let’s hope as many of them as possible continue in business as pubs under new owners.

As I’ve written recently, in their quest for expansion Spoons have been opening branches in smaller market towns that previously they wouldn’t have looked at, and also opening second branches in towns such as Preston. Inevitably this will increase the risk of failure, although so far I’ve not seen much evidence of retrenchment from market towns. They seem to have burnt their fingers in Whitchurch (Shropshire) but as far as I can see are going strong in places like Market Drayton and Leominster which have a similar population.

It’s not simply a question of there being a set limit for the smallest town that can sustain a Wetherspoons – you also need to consider the strength of the nearby competition and the degree to which the town acts as a magnet for the surrounding area. The smallest towns to have a Spoons would appear to be Pwllheli in North Wales (pop. 4,000) and Perranporth in Cornwall (pop. 3,000), although both of these attract a lot of summer holidaymakers and the pubs will probably be pretty quiet in winter, even to the extent of shutting part off.

What makes one pub succeed and another fail is always something of a mystery, and if Wetherspoons sometimes make a mistake it’s not entirely surprising that others often get it wrong. It’s an elusive combination of location, offer, price and standard of service.

9 comments:

  1. They opened the latest and third pub in Ireland, which also happens to be my home town on Tuesday. Much more modern than the classic spoons, no carpets! 2.50 for real ale and a better Irish craft bottle selection than the majority of the local pubs. I for one very much welcome thee expansion in Ireland :)

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  2. Many of the newer openings in UK, such as the Kingfisher in Poynton, are in a much more modernistic style that to my eye is more like a new-style McDonalds than a pub.

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  3. In fairness to then, the current site was a former night club so the classic pub look was never going to happen. Also I suspect they are aimed towards the cafe-bar effect to keep the pond life down. Previously the night club and a pub nearby (now gone) it had a bad reputation and failed as business.

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  4. As you say, Spoons have always churned their estate, and I'd say that even without this batch they must have disposed of around 120 over the years. As the estate gets bigger the numbers become more significant and noticeable.

    It's interesting that in the North East they're opening up in depressed towns, Blyth, Ashington, Wallsend as examples, where pubs have struggled for years, even before the Beer Orders. Geordie will spend his last quid on a pint so the lure of a cheap pint in 'posh' surroundings is a strong proposition. Needless to say of course any local competition finds it even harder to survive.

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  5. There's a full list of all former (and current) Spoons here.

    They've also opened branches in a number of depressed former mining towns in South Wales such as Maesteg and Tredegar, so it's not a case of gentrification as some have suggested.

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  6. If Spoons accept x% of new outlets will fail but accept the churn as the risk is low compared to the wins of those that succeed the bigger the estate gets and/or faster it grows, the more pubs will churn within the same % rate of failure.

    As for choosing new sites for outlets, I suspect they have metrics on locations that indicate likely demand for a spoons. Demographics, footfall etc that give an educated guess as to the likely demand.

    Much like Maccys is all about picking the right locations.

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  7. @ cooking lager - The Maccy D analogy is good - they also have a percentage of failures in proportion to the number of overall outlets, as do KFC, etc. And of course, Wetherspoons is the Maccy D of the pub trade.

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  8. Martin, Cambridge5 July 2015 at 09:06

    Looks to me like they've got rid of some of their older estate which had lower food sales, often in places where they have newer sites. Profit margins are tight so shedding 2-3% of your sites seems sensible.

    Generally, Spoons still seem to be doing very good business, particularly with older diners like my parents who will now ask me to take them to a Spoons to eat in a new town. Despite many blog comments to the contrary, they always experience good service.

    The newer pubs are very modern and, to many, attractive places to eat - the new sites at Deal and at Stansted airport stand out.




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  9. I think Martins right its probably just about food sale profits which is where Wetherspoons are making the margins. The Golden Lion in Ipswich which is on the list to be sold and a pub Im quite familiar with, was perhaps unusually a pub before Wetherspoons took it over.

    Although I dont think Grade 2 listing prevents you from mucking round with interiors too much, Wetherspoons did retain alot of the former pubs character and fittings with booths, and pillars, and its far from being a massive size.

    All of which means there arent perhaps as much space for sticking lots of tables that you can fit hungry people in, so whilst its always packed at weekends,if you were to look at food sales I suspect they would be down compared to even just other Wetherspoons in the same town.

    I also have a feeling giving the Golden Lions location in the town, which is basically the most central part of Ipswich, they are charged higher local rates for being in that location than elsewhere, and there have been rumours Wetherspoons were looking to open another bar in different part of town thats having one of those atypical dock regeneration things going on, but I kind of feel theyve lost out on the best available units down there until some more are built.

    but all of that together small space,not so much food being sold, high local rates, plus potential opportunities to move elsewhere and fix all of those issues, you can kind of see what Wetherspoons are thinking, whether thats true of the other locations I dont know, but Wetherspoons are perhaps uniquely for a pubco willing and able to play property musical chairs if they find things arent working out.

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