By 1986 Martin had 12 pubs, in “mainly less well-off London suburbs” and a profit of £500,000. “We were doing quite well but were always scraping around for finance,” he says. “I had a 95 per cent stake and my old man had a 5 per cent stake. We sold 15 per cent to some wealthy City folk and raised £600,000. It gave us credibility with the bank.”
It continued to sell new shares in the business until 1995. It is one of Martin’s few regrets. “We overdid the equity side. We issued far too much. It is a very expensive way of raising money,” he states. “It was good fun at the time but too many new shares dilutes the existing shareholders.”
During that period, in 1992, JD listed on the stockmarket meeting another Martin personal ambition. “In the 1970’s there weren’t many entrepreneurs whose main ambition was to eventually float on the stockmarket. But I really wanted to do it. I don’t like owning 100 per cent. It would have been too much responsibility,” he explains. “You also sell shares to protect your family if you get run over by a bus!”
After the group floated Martin says he “knew” that it was possible his 1,000 pub ambition would come true. In 1994 it opened its 100th pub with the 200th coming in 1997 and 400th in 2000.
Growth was helped by new innovations such as breakfasts and hotel accommodation. Curry nights and steak nights and beer festivals also helped it stand out from the crowd.
He acknowledges praise from BT for the remarkable growth rate. “Yes, we just out-traded all of our major rivals. They were doing their best to stop us but we made it difficult for them to retaliate,” he says. “Like a BMW there is a thousand components behind making it work. We were better on design, we were better looking, we had slightly better locations, we charged less for our beer and we offered something more for the customer every year. They are a demanding old bunch!”
Treating his staff, as well as his customers, right has also played a huge part. “One of my biggest learnings in the early days was that this was a people business. I needed good people and I listened to them. I understood that they knew more about running a pub than I did. They gave us the ideas,” he states. “It’s tricky to get the right staff but when we started the pub culture was cash in hand and not long-term work. We paid our staff a little more than our rivals and we had a generous bonus and shares system to encourage them to stay.”
Indeed the group paid out £29.2million in bonuses to its 34,000 staff last year – 82 per cent of those were pub workers.
In the next instalment in the series we hear how Martin got his business into shape…