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The Wetherspoon Effect

With a target here in Ireland of over 30 pubs to be set up in the not-too-distant future, how has the establishment of a JD Wetherspoon outlet affected neighbouring pubs in Northern Ireland and Scotland - regions with a similar family pub profile to here?

“If the supermarkets can bang out beers and spirits cheaper than we can buy it wholesale, that’s the hand we’ve been dealt and we’ll just have to get on with it, but for us it’s a different offer that doesn’t suit me and doesn’t suit the rest of my customers.”

So believes Stephen Reynolds, former Chairman of Pubs of Ulster, whose ‘Northern Ireland Community Pub of the Year’ The Front Page in Ballymena, is the closest pub to JD Wetherspoon’s first NI pub The Spinning Mill which arrived in the town back in 2000. Stephen’s attitude to the presence of a Wetherspoon outlet nearby is typical of that being taken to the arrival of the giant pub chain here.

With the opening of The Three Tun Tavern in Blackrock and the Forty Foot in Dun Laoghaire, JD Wetherspoon has set about the process of establishing what it claims will be a 30-strong chain of pubs here through a €50 million investment programme.

In Waterford the UK pub chain has snapped up the former Evans clothing store and former tsb premises in the city centre. It’s intends applying for planning permission for a €2 million pub development across the two buildings which may open later this year.

Other planned openings here in the next year include the former Newport in Paul Street in Cork and Camden Street in Dublin city as well as those in Blanchardstown and Swords.

So far, Wetherspoon has shown no intention of deviating from the cut-price model that’s served it well to date in the UK. The budget operation targets a particular price point and the formulaic food & drink offering brooks no TV or loud music.

But has the opening of a Wetherspoon outlet always been bad news for surrounding pubs?

 

Wetherspoon in Northern Ireland

The on-trade conglomerate has nine pubs in Northern Ireland and intends putting in another few.

When it first ventured there, it involved itself in heavy discounting, just as it subsequently did in Blackrock in County Dublin. But that soon ended, explains Colin Neil, Chief Executive of Pubs of Ulster.

“Now, on the major brands, they tend not to price discount” he says, “keeping that for English ales instead, for example.”

Wetherspoon has been in NI for 15 years now and seems to focus on a more food-oriented model these days, he adds.

“They do bring a price element into the competition but I don’t think they’re having that big-an impact – if they maintained their original price strategy, that would be a nightmare,” he believes.

“It bought two new premises in Belfast, one in the Queens University area and another down in the campus where the new University of Ulster will be, so it’s clearly aiming at the student market there.”

Of the 45- to 50-pub target for the island of Ireland, about five more will be introduced in NI and the company’s more than likely to have a distribution centre down south, believes Colin.

"If they maintained their original price strategy, that would be a nightmare" - Colin Neil.

“If they maintained their original price strategy, that would be a nightmare” – Colin Neil.

 

But the opening of a Wetherspoon outlet does not necessarily summon the death knell for surrounding pubs.

Morrisons in Belfast is next door to The Bridgehouse yet Morrisons continues to trade very successfully and has even opened a number of new premises around the city.

Indeed pubs in the locality of a Wetherspoons outlet have learned that they can still compete on service and quality and the fact that it’s a local entity where Wetherspoon’s tends to be a budget operation targeting a particular price point.

 

 

“Every town needs a bad pub,” quips Ballymena’s Stephen Reynolds, who’s run the aforementioned award-winning Front Page there for the past 25 years.

“For me it’s the equivalent of trying to compete with the supermarket, cheap and cheerful, but their customer service wouldn’t be as good as ours,” he claims, “They certainly have a range of drinks available but we’re an award-winning pub with award-winning staff so we’re not trying to compete with them directly.

“The only thing I’d ever consider duplicating about the Wetherspoon model is that they open from 8 to 9am and – given the growth of coffee shops in the area – I’d consider doing that myself.”

But the Scottish Licensed Trade Association’s Chief Executive Paul Waterson is far less sanguine than his Northern Irish counterpart about the Wetherspoon effect.

 

Wetherspoon in Scotland

As far as he’s concerned, it’s all bad for the local trade when a Wetherspoon outlet arrives.

“The trade has fought Wetherspoon’s openings where possible all over Scotland,” he says, “It’s quite a mature situation where the business was founded on cheap drink.

“And it’s fertile ground for them as the individual operators don’t have the buying power of Wetherspoon and can’t compete with them on price so they just blitzkrieg their way through the country, cutting prices and opening pubs tailored to compete with them.”

In time, prices creep up.

“A lot of them will spend money on their interior to compete with the pre-existing local outlet but if there’s not one there already, they’ll spend considerably less on décor,” he says, adding, “Ireland will be massive for them with the structure of the trade being the same as ours. They can go in and adopt the supermarket idea of cut-price drink which will be very good for them there. This will upset the balance of everything.

“Trade will have to change and some operators there will have to respond pricewise by going into price wars, wars that we’ve been fighting for years and we’ve needed legislation to stop that.”

As far as Paul Waterson’s concerned, the supermarket ethic rules the roost, “…. and Dublin is absolutely gold dust to them,” he stresses, “There’s loads of price to play with over there”.

 

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Wetherspoon’s don’t create any new business or add to the reputation of the trade, believes Paul Waterson.

 

But where it really hurts the Scottish trade is in secondary sites outside the cities. In one instance, a Wetherspoon outlet opened up in an old post office not long after four or five places had shut down.

“They’re now open at 8am and nearly give breakfast and coffee away – it’s all done on volumes and they’ve created this market for themselves all based around price. They don’t create any new business or add to the reputation of the trade.

“It’s one of the worst things that ever happened to the on-trade in Scotland as it’s all based around price.”

Paul predicts that in three or four years’ time “… Wetherspoon’s – and their like – will have taken over if we’re not helped.”

Others have pointed out that like it or loathe it, the Wetherspoon operation is very good at the strategic placement of pubs and the offers that it creates.

 

 

“They actually run their pubs in a very good way, doing stocks every morning, so they’ve very good systems in place within the chain,” said one observer, “In that sense, they’re good at running pubs and controlling their outlets financially.”

 

Will the Irish drinker embrace the Wetherspoon Way through price in the same way that the Scots have or will the independents still bank on offering local quality by way of a response?

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