The week that broke Wetherspoon?

Competition is stiff, but we may as well start etching Tim Martin’s name on the inaugural “Boss you don’t want in a covid-19 crisis” trophy, says David Burrows.

At the beginning of March, Edelman asked 10,000 people whether they trusted their employer to respond effectively and responsibly to the coronavirus outbreak. The average was 62% across 10 markets, but the most trusting were in the UK: 70% backed their bosses to do the business.

In most cases, it is far too early to say whether this faith will be repaid. However, the coronavirus already seems to be carving a canyon between the big companies that care – of which there are, pleasingly, many – and the ones that apparently don’t give a crap.

I would have put money on which side Mike Ashley, owner of Sports Direct and House of Fraser, fell (the crap one, in case you are wondering, along with Richard Branson at Virgin). However we may as well start etching Tim Martin’s name on the inaugural “Boss you don’t want in a covid-19 crisis” trophy.

In the space of a few days this week, the chairman of JD Wetherspoon abandoned both his 43,000 staff and his suppliers. According to the Bakers, Food and Allied Workers' Union, staff were not going to be paid between March 22nd and when the government’s furlough scheme kicks in. Martin also wrote to suppliers informing them he intended not to pay them until after pubs reopen – even if there was money owing.

In the supplier email, seen by Footprint, the pub chain said: “We are asking for a moratorium on payments, until the pubs reopen, at which point we intend to clear outstanding payments, within a short timeframe.” As one supplier told us, this isn’t just about the money owing, it’s the orders suppliers have paid for and were ready to send and those expected in the coming weeks. The implications of Martin’s request to withhold payment on the working capital for such small businesses, potentially for weeks, are huge.

Responding to a question from Footprint during this week’s rather timely Westminster Forum on fairness in the supply chain, Anthea McIntyre, former MEP and shadow rapporteur for unfair trading practices in the food supply chain, said suppliers could well be covered by the EU’s late payment directive. However, she understood that many would be reluctant to follow this route because they will be “fearful of commercial retaliation”. Calling up to negotiate, as the email implied, was pointless. One supplier told us: the likelihood is that a black line would be drawn through your name.

Martin’s treatment of staff has been equally ruthless and totally lacking in empathy. In the video, he explained how over the last weekend he has had “lots of phone calls with different people” (a line that brought back memories of former BP chief Tony Hayward’s “I’d like my life back” plea in the midst of the Gulf of Mexico disaster). He said “we are trying to sort it all out as best we can”. And the result? A message for them to go and work for Tesco.“We’ve got no money coming through the tills which is not something we had ever planned for as you can appreciate,” he said.

So, no contingency plans whatsoever. We are not talking about a solitary pub here (many of which are desperately trying to settle what they owe even though their cash flow has been cut off too), an independent curry house or even a 10-cover coffee shop. But that didn’t stop Martin playing the “little fish” card in some interviews; that his business could not be compared with the likes of McDonald’s or Costa who “can afford to retain staff and commit to paying them before details of the government furlough scheme are published”.

Those are big, big businesses, but Wetherspoon is hardly small: the company reported revenues of £1.8bn on pre-tax profit of £102.5m in its latest financial year. Martin reportedly has a 32% stake in the £1.7bn business, worth nearly £550m. Preliminary results for the 26 weeks to January 26th – published only last week – showed revenue up 4.9% to £933m and profit before tax and operating profit up 15.2% and 20.6% respectively. Slide 12 on the results presentation has the title “It’s a people thing”. Ironic doesn’t quite cut it. The slide shows how retention of managers has improved from around seven years in 2008 to 12.5 years now. Imagine you had worked somewhere since 2008 and it took just two days for your employer to cut you adrift on no pay and suggest you go and work in a supermarket?

There is more. Wetherspoon has been named a “top employer” by the Top Employer Institute – for 17 years in a row. “To become recognised as a top employer, an organisation will have to prove that the implementation of its people strategies enriches the world of work of its employees,” said the Institute’s CEO David Plink. I wonder whether Wetherspoon’s actions this past week will be taken into account in next year’s set of 100 questions (or indeed how many of the applicants fail to make the grade)?

What Martin has done – can we credit him for this? – is to ensure that other “don’t give a crap” bosses will now be exposed. There are already reports – yet to be confirmed at the time of writing – that Gordon Ramsay and Rick Stein have done the same thing to their 500 staff. Be sure: journalists will be digging.

The pressure has already forced Martin (much like Branson too) into a u-turn in relation to staff. According to Propel, the chain has been working with UKHospitality to draw up proposals for how the government’s Coronavirus Job Retention Scheme could work. There is little detail yet, however, or reassurance for staff that they’ll be paid during any gap.

As for suppliers they remain in complete limbo. Where do they stand legally? The Guardian quoted a lawyer who suggested the “force majeure” clause could free the company of contractual obligations but “there is no legal precedent in using it this way”.

And how will Wetherspoon’s customers react when the doors do reopen? There were 18.6m customer visits to these pubs in the past six months, according to CGA. What might that figure be in the first six months post coronavirus? They will have a tough decision to make. On Twitter some were singing the praises of the pubs and the staff: they don’t want to abandon them when isolation is lifted, but any show of support would simultaneously line the already deep pockets of Martin.

Wetherspoon has long had its critics too but, thanks to the hard-working staff who offer comfort and convenience to many, it is far from a Marmite brand. However, this has been a damaging week for Tim Martin and his pub chain. Martin signed off his staff video with the words: “Best of luck.” After this week it might not just be his workers who need it.

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