Current trading: Like-for-like sales for the six weeks to 10 September were up 6.1%, although Martin said that since the end of the school holidays they had become “more subdued”. He added the positive start was unlikely to continue for the rest of the year because of more stretching comparisons, particularly in the second half of the year. He said: “We think 3% to 4% is more realistic. I hope we are being unduly cautious but we anticipate a trading outcome for the current financial year in line with our expectations.”

Average weekly total sales per pub near £42,000: Average weekly total sales per pub are now at a record level of £41,700 including VAT, compared with £39,000 the previous year. Martin said the company had worked hard to increase sales and, on average, sales per pub had more than doubled since 1998.

Taxes hitting pub estate potential: Martin said he believed Wetherspoon could potentially have an estate of 1,600 pubs if there was a level playing field between the taxes paid by pubs and supermarkets but believed the company would now end up with about 1,200 if things “remained as they were”. He said: “Our potential at the moment is about 1,200 pubs but we could have 1,500 or 1,600 if there was equal tax between the on and off-trade. We think we should pay tax – essentially it’s what makes the world go round – but we think it’s unfair we pay more than supermarkets. I don’t think the government should receive less money but it should level the playing field between the on and off-trade. If you want to regenerate high streets, I think equalising the tax levels would do that because it should bring in more jobs, particularly to less-affluent areas. I think overall we benefit from the supermarkets because companies such as Aldi and Lidl have come in and made food cheaper but I think the government needs to look at the bigger picture.”  

Small town expansion opportunity: Martin said the company was concentrating on opening pubs in smaller towns having made its mark in many of the larger towns and cities. He said: “We started expanding quite a bit in 2008/09 when property pieces were lower but we’ve slowed again now. We are opening a few pubs here and there rather than being in full expansion mode. However, that’s more to do with the fact we have 150 pubs in London and we’ve filled up most of the obvious places. Most of the places we are opening are in small towns where there is still quite a lot of potential for us.”

Coffee is king, breakfast the biggest occasion: Martin said the company’s top-selling product was Lavazza coffee and its second-biggest seller was Pepsi. He added Wetherspoon was the biggest single customer for Kopparberg cider and at one point was “selling more than the whole of Sweden”. He said: “This whole perception the EU is going to make Brexit hard for the UK is wrong because of suppliers in the EU, such as Lavazza, who sell their products to companies such as Wetherspoon. Most of our food and drink comes from the UK while our wine comes from New Zealand, Australia, South America and South Africa.” Like-for-like food sales in the year were up 5.7% and made up 35% of sales in its pubs, with average weekly sales of £14,600 per pub. The company has an average food hygiene rating score of 4.89 out of 5, while 91.8% of its pubs have achieved the maximum score. Martin said: “I think one of the major things that has helped us with food sales has been the Scores On The Doors scheme and, along with Pret, we’re rated right at the top. I think it melted some of the unjustified criticism about our food and put us in a better light with customers.” Martin said breakfast was now its biggest meal occasion. Wetherspoon is the fourth most-visited brand for breakfast, according to data from CGA Peach, with 17% of consumers eating out at breakfast for the past six months at Wetherspoon. Bar sales in the period increased 3.1% on a like-for-like basis and drink still makes up the majority of the sales mix at 61%, with average weekly sales of £25,500 per pub. Martin said the company had continued to improve its products while craft beer remained a major focus for the company, with 248 of its pubs in the 2017 CAMRA Good Beer Guide.

Costs keep climbing: The company has seen below-inflation increases in bar and food costs so far this year but continues to face a number of other cost increases. Wages have increased 4.5% while during the year there has been additional excise duty of £7m, £7m extra in business rates and £2m for the Apprenticeship Levy. The company also faces additional costs of £4m in the shape of the sugar tax from April 2018 and an additional £2m in energy taxes from next month. Wetherspoon paid tax of £694.6m in the year, up from £672.3m the previous year. This worked out at £768,000 per pub. Its tax as a percentage of sales has come down to 41.8%, compared with 42.1% the previous year. Martin said the company paid VAT totalling £90m on food. He added: “Another area where pubs suffer is business rates. Supermarkets are paying about 2p a pint while pubs are paying 18p or 19p.” Martin said the company would continue to keep prices as competitive as it could but did not rule out having to pass some cost increases on to customers. Meanwhile, operating margin rose to 7.7% compared with 6.9% the previous year and Martin said the days of a 19% operating margin as seen in 1997 were “long gone”. He added: “Improving our operating margin will depend on us continuing to improve sales.”

Wetherspoon the choice to eat and drink: Wetherspoon is the most-used brand for sit-down meals, according to data from CGA. When consumers were asked where they had eaten in the past six months, 36% said Wetherspoon, with Pizza Hut second on 22% and Nando’s third with 21%. The gap is even wider when it comes to branded drinking-out occasions. Wetherspoon topped the list with 42% of people having drunk there in the past six months, with Mitchells & Butlers’ All Bar One and Greene King joint second with 13%. Wetherspoon is the fifth most-used eating brand in Britain, with 36% of the population having visited one of its pubs in the past six months, with quick-service outlets McDonald’s, Costa Coffee, Greggs and KFC ranking above.

Hotels – we’re not ‘Premier Inn or Travelodge’: The company has 53 hotels, having opened seven more during the period, and now had about 1,100 rooms in total. Martin said it would continue to look at adding rooms to pubs where it had unused space on upper floors. He said: “I think we are just feeling our way at the moment – we are not Premier Inn or Travelodge so we’re not going to be opening sites with 50 rooms. I think at most sites where we have hotels they will have six, seven or eight rooms because that’s the sort of space we have. For example, we recently added three rooms at a pub in Sittingbourne and seven at a site in Aldershot. We are looking at opening four or five new hotels a year but it’s a niche business really.” Hotel like-for-like sales were up 9.9% in the year.

Pub investment and freeholds: The company increased reinvestment in its existing pubs to £58.6m, compared with £33.5m the year before. This included £25.3m on kitchen and bar equipment, £19.8m on refurbishments, and £13.5m on business and IT projects. Wetherspoon has continued to “buy in” pub freeholds where it has the opportunity as a sitting tenant, taking the percentage of freehold sites in the estate to 57% from 51.4% the year before. The company more than doubled its spend to £88.6m on freehold reversions and investment properties during the year, up from £36.1m the year before. The company opened ten pubs in the year (nine freehold and one leasehold) and closed 41 sites. During the year 45 sites had been sold, including pubs that had closed in the previous year. Five sites were classified as held for sale and an additional three pubs have been closed and remained unsold as part of the disposal programme. The company plans to open ten to 15 pubs this year. The average cost of development is now £2.29m, compared with £2.46m the previous year. The average size of new openings during the year was 4,379 square feet, compared with 4,264 square feet the year before. Finance director Ben Whitley said expenditure on new pubs was “down a little bit”. Net debt/Ebitda fell to 3.39 times, which was “well within” banking covenants.

Staff matter: The company had record levels of staff retention, with the average length of service for pub managers now more than 11 years and five months and kitchen managers eight years. A total of £44m was paid in bonuses and free shares, of which 96% was paid to staff below board level and 74% to staff working in its pubs. The company had more than 37,000 employees at the end of the period – about 10,000 of them shareholders in the company. It is also supporting the development of female managers into senior positions through its “Women At Wetherspoon” scheme. Martin said its staff would continue to be fully involved with the company’s decision-making process. A total of 1,371 employees have graduated through the company’s Catering Academy, with 713 employees currently going through the programme. It is open to staff running a shift or kitchen. Chief executive John Hutson said: “We will continue to improve training and development across the company.”

Airports: Martin said the company was working with airports following concerns raised by airlines about the amount passengers were drinking in pubs before flights, but he was unaware of any problems regarding bad behaviour at Wetherspoon sites. He added that 60% to 70% of sales at some of its airport sites came from food, soft drink and coffee sales rather than alcohol. Martin said if there were going to be rules introduced, he would not want them to be “too draconian”.

Outlook: The company currently has 895 pubs and Martin believes the company will continue to perform well. He said: “I think there is still a decent level of consumer spending, particularly in pubs, and the recent results from companies such as Young’s and Fuller’s suggest they seem to be doing okay.” He added: “We will continue to try to make improvements, including working on individual dishes. Our pubs are not perfect but we are hammering away to make improvements.”