Lessons from the start-ups

The CGA Peach 2020 Conference’s Entrepreneurs Panel brought together four of the country’s most hotly tipped operators. Here are some of the things we learned

It’s cut-throat out there
One of the Conference’s clearest perspectives on the fiercely competitive UK market came from the US and Scott Svenson, who is working with Sir Charles Dunstone to bring the MOD pizza to the UK from the US. Having set up and sold the Seattle Coffee Company he knows a thing or two about building brands, but admits it is a much more daunting market to break into than it was when he set up that business in the mid 1990s. “What we see in the UK now is one of the most dynamic and impressive line-up of concepts and food and service of any market in the world… We come back [from the US] with a good deal of humility, because it’s a much more competitive world now. It’s fun to watch and to be a customer, but as a concept that is looking to break into the marketplace, it’s intimidating.”

That said, MOD is clearly not a brand to just dip a toe in the water. Having started the year with 31 restaurants in the US, it is on track to reach 95 by the end of this year, and expects to reach 200 by the end of next, Svenson said. “We’ll test the concept and localize it, but to the extent that it’s as successful as we anticipate we will grow it at a reasonable rate.”

Flexibility is key
As Dunstone also told the Conference, one of MOD’s points of difference is its customization, giving customers the opportunity to choose the toppings of their pizzas. And Svenson’s three fellow entrepreneurial panelists agreed that it is this sort of flexibility that will be essential if concepts are to thrive in the years ahead. 

At hugely popular Bombay café group Dishoom, this adaptability manifests itself in breakfast-to-dinner eating, said co-founder Kavi Thakrar—the freedom to drop in to eat or drink at any time of day. At the Seafood Pub Company, founder Joycelyn Neve said sites needed to flex their offer from day to day and daypart to daypart, with her seven pub restaurants trading very differently during midweek than at weekends. Adding in extra elements like accommodation wherever possible had proved another valuable way to diversify, she added. 

Branding is not black and white
The Seafood Pub Company now trades from seven pubs, all in Lancashire—and while they are closely tied under one umbrella, they all have different names and are nuanced to appeal to their local markets. 

It is a similar story at fellow north west group the New World Trading Company, which is now opening at the rate of five or six new sites a year. The Botanist is its core pub brand, but managing director Chris Hill said the group was not afraid to build new and bespoke concepts, as with the Trading House on Gresham Street in London. “[Having different brands] gives us multiple opportunities in multiple city centres,” said Hill. It’s what’s under the bonnet rather than the label on top that counts, he argued. “There are design twists between them all the pubs—but the clever bit we’ve managed to pull off is that actually the fabric of them is identical.”

Good people = good businesses
All four entrepreneurs agreed on the paramount importance of people to any business—but especially those that are trying to carve out a reputation. Hill said success with people and sales was inextricably linked. “It’s not a chicken-or-the-egg question—not about happy teams making great businesses, or great businesses making happy teams.” 

But how to achieve that staff contentment? Hill recommended careful recruitment to make sure teams are a good fit for the company’s culture. “If you don’t give it [recruitment] the respect and time it deserves then you inevitably start on the back foot—we quickly learned that in some of our early openings.” 

Incentivising senior leaders is another useful tactic, said Thakrar, who ties the assessment of Dishoom managers’ performances to those of their teams. “Only if your team is happy are your customers going to be happy. If they’re not then the managers don’t get their bonus… they’re incentivized to make sure their teams are looked after.”

Keeping staff motivated is another big challenge—not least in rural areas like those served by the Seafood Pub Company. Neve said the far-flung nature of her group made it all the more important to give people the chance to progress through the ranks and move around from site to site. “If our people can see someone who was a waitress a year ago in a management programme… it shows them what can be achieved.” 

The company works with local food colleges on work experience programmes, and aims to reward people who work hard rather than just tick boxes. “There are no set rules about how long you need to have been in the industry, and it’s not about what’s on your CV—it’s just about hitting your objectives and taking the next step on the ladder.” Kitchen teams are encouraged to put forward ideas into their pubs’ menus too. “Good staff need creative input,” said Neve.

Pay rises might be a good thing
One of the big talking points of 2016 will be the effect of the new National Living Wage on operators’ costs and margins. Much of the conversation so far has been around the negative consequences, but Svenson has shown with MOD that paying extra can bring benefits. In the US the company starts all staff at $10 an hour against a federal minimum of $7.25, with steep rises for those who move up the ladder—and Svenson thinks that kind of approach will serve it well in the UK too. “We’ve built our economic model on the assumption that we’re going to pay people well, and the same thing will apply here.”

MOD will also bring over Svenson’s philosophy that businesses should be built both for and around people. “It’s going to be very much about the people—bringing the culture that we’ve established in the US to the UK.” If MOD’s example is anything to go by, then the extra money on offer from the National Living Wage might prompt more people to build careers in the sector. “The fact the [pay] floor is moving up is a healthy thing for the industry.”

Brands should tell a story
Panelists agreed on the need for brands to have distinctive personalities, and at Dishoom the identity is based on the old Iranian cafes of Indian cities. “It always comes back to creating a story that gets under the skin of Bombay and London—everything hangs off that,” said Thakrar.

Social media is an important element of the storytelling, Svenson added, particularly with young adults. “The millennials are a big part of our employer base and a big part of our customer base, and they’re very digitally connected. We’ve got a team dedicated to social media—but there aren’t really any tricks to it apart from staying engaged and staying relevant.”

One anecdote from the New World Trading Company illustrated the power of social media. After celebrity Colleen Rooney visited its Smugglers Cove venue in Liverpool, she tweeted an endorsement. “We’ve been inundated ever since,” said Hill.

Entrepreneurs must ‘grow roots as well as branches’
Plenty of emerging businesses face growing pains, but the four on the Conference panel seem keenly aware of the risks of expansion as well as the opportunities. For the New World Trading Company, the biggest challenge is to preserve the traits and ideals it has established so far, Hill said. “We want to make sure our roots grow with our branches and that we keep our culture true.”

Svenson agreed, saying MOD would remain resolutely focused on its people. “We’re growing really rapidly and there’s a big opportunity in front of us. To not lose our culture and instead use it as a source of strength and energy—that’s the thing we’re constantly talking about.”