This FTSE 250 stock may be a relative gem for investors to consider buying

If I had reviewed FTSE 250 incumbent JD Wetherspoon (LSE: JDW) as a stock to buy a few years ago, I would have run for the hills.

Well, times are changing, and now I think it could be a small diamond in the rough after recent developments.

I think it's worth taking a closer look at the stock. Here is the reason.

Pubs galore

Everyone loves going to the pub, right? However, despite this feeling, JD Wetherspoon has proved to be a business on the ropes in recent years. Naturally, the pandemic didn't help, and borrowing to keep the lights on hurt the company's balance sheet.

The shares are not flying well either, up just 2% over the 12-month period from 705p this time last year, to current levels of 722p. In a five-year period they have fallen by 52% from 1,533p to current levels.

It's fair to say that stocks haven't really recovered from the turmoil brought on by the pandemic.

A change in style and behavior

A major change in the way a company operates can be a business spinoff. Also, it can be a long-term way for the shares to recover, and provide more value to shareholders in the years to come.

How do you ask? Well, JD Wetherspoon has been quietly ditching pubs that aren't exactly yours. This is because it can help keep costs down and remain attractive to customers as a value proposition. Decreasing rental costs are good for the company's long-term future. In context, business now owns 71% of its physical space, compared to 47% a decade ago.

I will admit I don't think this approach alone will help the company return to its former glory. It also needs the hospitality sector to recover. However, there have been signs of that as well. A pre-closure trading update issued in July addressed this. The update said the 10 weeks to 7 July saw a like-for-like sales increase of 5.8%, and a year-to-date increase of 7.7%. This is on the back of some promising updates recently.

Risks to be aware of

Despite looking to keep costs low such as real estate, it cannot control other costs such as wage inflation and energy costs. Both of these factors can cause income to erode, and can lead to price increases. The latter is not good news as many customers prefer to frequent JD Wetherspoon outlets for the attractive value of food and drinks.

The short-term risk is that of recent economic turmoil. High interest rates and inflation have created a cost of living problem. As consumers struggle with the ever-increasing cost of living, going to the pub may not be something many can do as often as they'd like. JD Wetherspoon can see the benefits being affected.

Overall, I believe there is a good opportunity for investors to consider here. My view is that this can be a long-term effort, and that transformation and eventual recovery is not a quick process.

Personally, I will be watching developments closely. The company's next update should start in early October, which will help me decide whether to buy more shares soon.