Welcome to our exciting new feature. Starting today, each Wednesday we interview the chief executive of a FTSE 350-listed company, providing you with an insight into how their company is faring the economic downturn, their hopes for the future, and a glimpse into life outside the office. Kickstarting this weekly feature for us today is John Hutson, chief executive of pubs operator JD Wetherspoon.
1. How effectively has your company coped with the recession, and why?
We have performed reasonably well over the last 12 months by working on
improving service, the quality and range of items we sell and promoting
the value we can offer. In addition, we have benefited from long serving
and motivated staff. Around a third of the company’s profits are paid
out in bonuses and shares to employees every year and this has helped to
ensure that retention levels are the best in the industry. Bonuses are
linked to service and standards which provides an incentive to improve
the pubs from a customer point of view.
2. How do you think your industry will change in the next 12 months,
and what are your plans to take advantage of those changes?
A phenomenon of the last 15 years has been the huge amount of spending
on brand new pubs in most towns and cities throughout the UK.
Wetherspoon alone has spent almost £1 billion during that period. But
this expansion has now slowed almost to a complete halt, with
Wetherspoon being one of the very few companies still opening new pubs.
A further ‘evolution’ has been that many of the pubs that opened have
been sold by the original owners and are now often being sold again for
little or no premium to companies that are able and prepared to take on
the rental liabilities. This situation provides new expansion
opportunities for Wetherspoon that haven’t really existed in the past.
3. What are your immediate priorities for dealing with the downturn?
Carry on doing what we do well and try not to get distracted by the
things that we cannot control! Competition remains tough and businesses
are working hard to attract trade, but we feel that we have a long-term
reputation for offering terrific value for our customers backed up by
good service and standards and, whilst we can always improve, feel
confident that we will continue to prosper.
4. Can you describe in a nutshell what your long term strategy is?
To grow sales and profits on our existing estate and to open new pubs.
We select sites carefully and tend to do deal one pub at a time. Over
the long term we are confident that we can grow our estate to 1,200 or
more pubs.
John Hutson, CEO at JD Wetherspoon since 2004.
5. Are acquisitions or divestments likely to play a part in your
strategy and if so what area(s) would you be interested in?
As stated above, we are confident that we can continue to grow on an
organic basis throughout the UK, taking advantage of an improved
property market with the added dynamics of an increasing number of
previously owned pubs becoming available at little or no premium. We
have no current plans to divest of any pubs, although we continually
monitor this.
6. What aspect of your company’s current activities really excites
you?
We try to push everything along bit by bit, year after year and avoid
big projects. One area where I believe we are starting to make our mark
is in improving our efforts with wine. Over the last three or four years
our wine festivals have become increasingly popular amongst our
customers and, last time around, we had six wines specifically sourced
for us from a terrific New Zealand wine maker called Matthew Thompson.
He told me that the wines we were offering usually sold at cost what we
were retailing them for!
7. Executive compensation is increasingly in the spotlight these
days. What’s your philosophy on rewarding your senior level employees?
Our general philosophy in Wetherspoon is that people should be rewarded
on performance and responsibility based on merit. The majority of the
senior team have been developed and promoted internally and we are
fortunate to have good levels of retention throughout the company.
Performance-related pay reflects, I believe, shareholder values and
focuses on improvements in cash earnings.
8. What’s been the high and low point of your time as CEO?
I’ve been with Wetherspoon for around 19 years and Managing Director or
Chief Executive for the last 12 or 13 of those. High points are too
numerous to mention although, in recent times, winning the inaugural
responsible drinks retailer of the year award (a joint initiative
between the Morning Advertiser – a trade publication – and the Home
Office) was something that I was very proud of. It demonstrated how
seriously we take our obligations as retailers of alcohol and, I think,
promoted Wetherspoon as a company trying to take a lead in improving the
way pubs do their job in a modern era. And low points? I think everyone
has bad days at the office but almost anything can be turned to your
advantage if you put your mind to it and when there have been such
times, either for me or as a company, that’s what I try to look for.
9. If you lost your job tomorrow and decided to change career, what
would you do instead?
Alex Ferguson has to retire eventually and giving the job to someone who
once played intramural football at Exeter University could be the sort
of left field appointment they should ponder?
10. How do you relax and what are your non-work interests?
Outside of work family is the main event, although I have spent the last
five years trying to take up golf. I have managed to get my handicap
from 28 down to around 24 in that time. My rate of improvement, should
it continue, means I will be scratch by retirement!
