JDW versus RTN. Ten year tussle but I think we have a winner…
JD Wetherspoon & Restaurant Group; contrasting styles…
- In 2013, 14 & 15 we ran side-by-side pieces comparing JDW w. RTN.
- Whilst the companies were broadly the same size, we much preferred JDW
- RTN had lower sales but higher margins
- Whilst JDW ‘invested’ its lost margin in staff, product and premises & had more freeholds
- RTN was perhaps lean on cost & its prices were top quartile. JDW, well, wasn’t.
- Critically RTN was arguably run by accountants whilst the JDW boss is a pubs nutter
- This is critically important in determining culture & focus on short vs long term prospects
- JDW’s margins have remained under (self-imposed) pressure but trading is stable
- RTN, on the other hand, has managed three profit warnings in little more than four months
- It is changing its CEO, CFO and chairman in little more than a year
- Investors have a queasy feeling that its past is not an accurate guide to its future
- The RTN/JDW switch chart has an unpleasant, falling-out-of bed feel to it
Where to now?
- Might RTN get bid for? Yes – but what could a penny-pinching PE house bring to the party?
- Is JDW a better prospect at ‘twice the price’? In our opinion, yes.
- So would we switch back? We prefer pubs nutters with a 20yr view so, well, no.