Wetherspoons boss Tim Martin has cast doubt on the future of the pub chain’s Trafford Centre site after revealing that rent hikes have left the pub not making any profits.
The pub magnate also suggested that the restaurant trade could be experiencing a crash similar to the one that followed a pub boom in the 1990’s.
In a meandering comment piece on the Morning Advertiser’s website, Martin blasted open market rent reviews, ’greedy landlords’, property surveyors and naive restauranteurs who, he claims, have pushed up rents for other operators.
He claims, for instance, that when Jamie Oliver took over a restaurant in St Albans and agreed a ‘daft’ rent per square foot, it increased rents across the town centre because of the open rent review system.
“In spite of a veneer of sophistication, it only takes one optimist to agree a daft rent and every tenant in town ends up paying something similar”, Martin said.
He went onto claim that this was a symptom of a more widespread problem, with in-trouble restaurant chains Carluccio’s, Prezzo, Jamie’s and Byron consistently opening up in developments ‘within a stones throw from each other’ and subjecting other local businesses to massive rental hikes.
For Martin, the Trafford Centre is one epicentre of this rental insanity.
He claims that, after a major pubco moved into the Trafford Centre a year or two ago, it eventually pushed their rent up from about £230,000 or 10% of their takings to £415,000.
Representing around 20% of the pubs turnover, this increase wiped out the pub’s entire profit margin.
“Whatever the answer, the property market is again making a bad situation worse, by pushing up rents in the teeth of a vicious restaurant recession, and in a climate where three or four pubs are shutting down every week,” Martin said.
One of the key problems for the Trafford Centre Wetherspoons was that the company agreed to an open market rent review.
Martin claims that Wetherspoons does not normally agree to these periodic market rent adjustments, but they did for the Trafford Centre site.
Wetherspoons posted positive trading figures for the second half of 2017, but chairman Tim Martin issued a note of caution for the year ahead.
“The company anticipates higher costs in the second half of the financial year, in areas including pay, taxes and utilities,” he said.
“In view of these additional costs, and our expectation that growth in like-for-like sales will be lower in the next six months, the company remains cautious about the second half of the year,” he added.
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