Tim Martin, founder and chairman of J D Wetherspoon
Tim Martin, founder and chairman of pub chain stalwart J D Wetherspoon, tells Bryce Wilcock how the decisions that drive the business forward are often made in the pub…
Tim Martin is unlike most other seriously rich entrepreneurs. In fact, for a man with a net-worth of around £280m, he is more akin to one of the locals in the village pub than the champagne popping businessmen in the City.
But then again, what more would you expect from the man behind J D Wetherspoon, the UK’s largest pub chain? “I spend two days a week visiting pubs,” he says, “and some people think my job is fantastic!”
Tim and I met shortly after he had finished his weekly French class at The Penderel’s Oak pub in High Holborn, London, as typical a Wetherspoon pub as you’ll ever see. Nestled under a five-story eyesore of an office block, the pub with its traditional wooden facade and blooming hanging baskets adds a real splash of colour and history to what is quite a dull block of buildings.
And that is the case, as you’ll probably have noticed, with many Wetherspoon pubs. Although the chain is renowned for its cheap food and drink, it takes great pride in its appearance. Many of its pubs are located in listed buildings. In fact, as soon as Tim and I sat down and started talking, he immediately noticed that the new lights they had fitted weeks earlier were too bright and were startling his eyes.
Immediately he pulled out his phone and looked to fix the problem. If it was too bright for him, it would be too bright for his customers, and something must be done about it. He touches on this when asked what makes Wetherspoon’s different to other pubs: “We’re slightly lower in price than our competitors, all of our staff get bonuses whereas most other companies don’t have the same incentives and we’re also slightly better at design – interior and exterior.” He jokes: “Despite the fact they’ve buggared up the lights in one of my favourite pubs!”
That’s Tim to a tee. Sitting in one of his pubs, it would be easy for someone who had never seen him before to mistake him as one of the regulars. But more importantly, as well as soaking up the customer experience, he is also making sure his staff are having a good time – and this is what Tim has founded his pub empire on. A strong dedication to deliver only the best for his staff.
“When I visit our pubs, I don’t disguise myself,” he explains. “I wander up to the bar and order a drink and then I try and at least say hello to all of the staff – from the kitchen to the front of house. I then sit down for 20 minutes and have a chat with the pub manager. When I go away I write up my call notes and send them around to everyone who works at the head office.”
And for a 62-year-old entrepreneur whose business employs over 37,000 people, he is doing a good job at keeping them happy and getting to know as many as he can. Although I gathered he must be in The Penderel’s Oak quite often (he had an interview here earlier that day and an interview with the Standard shortly after speaking to us), I was amazed at just how well he knew and got on with all of the staff there.
As we walked through the pub he knew most of them by name and would have a little chatter and then get back to talking about the history behind Wetherspoon’s and how he has grown the chain from the ground up. “I think it is of vital importance that business people know what’s happening on the shop floor,” he said. “It is one of the main differences between our company and our competitors.
“All of our head office staff make quite a reasonable number of calls per month into our pubs and try and take something out of their visits. This helps us make decisions alongside pub managers and area managers as opposed to just making decisions in the head office. I think our company makes a lot of key decisions which the people who work in our pubs are heavily involved in and a lot of other companies are less involved with their staff on the ground.”
This commitment to putting the power of decision making right into the hands of those that pour the pints of craft ales that keep the company in business is what has helped Tim grow what started off as a single pub in 1979 into the UK’s largest pub chain. But that’s not the only way he ensures all of his staff buy into the company’s vision.
As well as allowing staff to shape the future of the business, he also rewards them quite generously when these decisions prove to be shrewd ones. “We have a really high retention rate of pub managers,” he adds. “I think our incentive systems play a huge part in that and also the fact that we give shares to everyone who has been with us for over 18 months.
“We also have a quarterly bonus system which applies to every person who works here. Nobody gets a fortune as there’s so many people but we make sure everyone benefits. I think training is important as well and also the fact that staff participate in the decision making is important, they have a big say in what goes on here.”
So where did it all start? Tim was brought up in Dungannon, Northern Ireland and then moved with his family to New Zealand before returning to the UK to study law at Nottingham University. It was when he graduated from Nottingham and moved to London to begin training as a barrister that he decided he would go into the pub trade.
“I worked for a year doing various jobs before qualifying as a barrister,” he recalls. “It was whilst I was training to be a barrister that I started drinking in a small pub in Muswell Hill in North London and the guy who was the leaseholder didn’t like it. I took on his lease and that was that.”
When he took over the Muswell Hill pub it was already quite busy so Tim was quite confident that he could have a real go at it. In fact, as he confesses, he was a little too confident: “One thing about the first pub even before I owned it was that it was very busy.
“I realised that there was a big market for pubs which weren’t owned by brewers. I went to uni in Nottingham and the city had a lot of small family brewers. When I moved to London, I quickly noticed that there were no family brewers in North London, there were only big breweries.
“In that era, in the 70’s, the beer was very poor quality and the pubs were quite run down. My perception from the first pub was that if I could reproduce a pub similar to pub one elsewhere, then I could go on to open 1,000 pubs across the UK. I said that at the time.”
Tim adds: “I was over confident to start with. If you had asked me two or three years later, I would’ve said ‘I’ll never do it!’ I’ll never forget that. It was three years until we made a profit. We just made enough to live on, just about. Our first profit was the year starting 1 August 1983. The first three years we made no profit and the fourth year we had a very good year.
“We then slowly built up our portfolio and had 40 pubs by 1992, that’s when we floated on the stock market. In the next 10 years, it just grew rapidly, we had around 400-500 pubs. Another 10 years down the line and we now have around 930 pubs from Penzance all the way up to Wick.”
This rapid growth has taken place despite the fact that pubs across the UK have been closing almost as quick as movie rental stores. In fact, the latest statistics from an audit of London’s public houses released just last week shows that London alone has lost 1,220 pubs since 2001 – an average of 81 closures a year.
So, what makes Wetherspoon different to those that have fallen by the wayside? Tim explains: “I don’t think you can isolate one thing. I used to always say that there are 1,000 components that make a BMW – but after pulling out of the EU – I suppose I’d best say Nissan now! There are 1,000 components in a Nissan and that’s the same for businesses – there are many components which make a business a success."
For those that don't know, Tim was one of the few top business leaders to speak out in favour of Brexit when the EU Referendum was announced. In fact, he has been pro-actively campaigning for Britain to leave the EU since 2002 and throughout the referendum had 'Vote Leave' beer mats sitting in most of his 930 pubs.
So how does he feel the UK will fare outside of the EU? He adds: "I think it is going to be a big plus. Democratic countries do better whether you look at Australia, New Zealand, Singapore, or any of those countries. Look at how well Japan has done since it became democratic. In 30 years, it became the second biggest economy in the world. Democracy always works when you have proper democracy. The EU has become undemocratic and it is causing tremendous problems in Greece, Portugal, Spain and even in countries like France where they have 10% unemployment whereas ours is 5%."
Getting back to how the company stands out from the crowd, he continues: “We’re always trying to make little improvements as we go along, nothing we do is perfect. One of our key philosophies is that businesses are best when they make lots of small improvements rather than trying to invent the iPad or the iPhone. We’re always looking at new ways of cleaning the tables, better ways of cooking our steaks, better cutlery – it has all added up over the years.
“I think there are five key things though which have really driven our growth. One is our ambition. Two is customer demand. Three is good training. Four is good design and five is the ability to recruit and retain very good people. I think the bonus scheme is very important as well.”
Tim pauses for a second and quickly calls over one of the floor staff to ask her opinion, “Beth!” she stops in her tracks and pops over to the table. “How many years have you worked for Wetherspoon?” he asks. “Two” she says. “Two, would you say, from the people that you speak to, that the bonus scheme matters?”
Beth says: “It definitely does matter, it encourages them to stay here as well and when you break it down, and they realise that it reflects how the company performs, it encourages them to work even harder.”
“And what about the share scheme?” Tim asks. “Yeah, the shares definitely have a big impact as well. When they mature and people cash them in you hear people talking about it and getting excited about it. I’m going to have to crack on!” and she sets off back to work.
Again, Tim just like that, doesn’t even hesitate to stop and ask his staff for their opinion on matters. I wonder if the top dogs at General Mills do the same at their cereal manufacturing plants or whether Roger Eaton does the same at KFC? Probably not but I stand to be proven wrong.
And so, amongst all of this success, I can’t help but ask the question, what has been your biggest success? “I think our biggest achievement has been getting to a dozen pubs with no outside investors and then floating on the stock market.
“Looking at it objectively though, our biggest achievement is that we pay around £700m worth of tax in one way or another a year which is 10x more than our profits. We’re doing something for the country.
“Also, the fact that we employ 37,000 people directly and a lot of people indirectly. Looked at objectively, that’s our biggest achievement actually. We’ve done something which has benefited the people who work in the company and also benefited the country as a whole.”
And the biggest challenge he has faced? “I think there has been quite a few but one in particular I think has been attracting and retaining the best people. I think there have been a lot of financial challenges along the way also – we started in ’79 and there was a huge recession from 1980 – 1983, another huge recession from 1990-1993 and a massive recession in 2008.
“They were really challenging for the pub trade and a lot of pub companies didn’t make it through. I think getting the design right, getting the people right and the finances right really helped carry us through.”
Finally, having overcome all of these challenges and established himself as arguably the UK’s most successful ever pub landlord, what next?
“I think more of the same really,” he concludes. “Keep on walking and don’t look back! I have that as a motto on the wall of the office. It’s a quote from Captain Beefheart who is a 1960’s/1970’s rocker. Keep on walking don’t look back – I say keep working and don’t look back – so long as I can get a couple of pints on an evening I’m happy!
“We’re heading towards the £2bn turnover mark now. We won’t hit £2bn this year but we’re heading towards that – I think it’ll take a few years but I think we’ll get there. We employ 37,000 people now and we want to continue see that growing.”
Tim’s top three tips for entrepreneurs: