Event Review

The Arena Summer Event explored the immediate challenges and opportunities facing industry suppliers and operators as they negotiate a period of uncertainty and change, brought about by Brexit, the falling pound, inflation, rising food costs, and now a general election.

Hospitality and foodservice professionals from across the industry gathered at the glorious Jumeirah Carlton Tower, to hear differing perspectives from an exclusive panel debate on supplier/operator relationships, share ideas with industry colleagues and get a flavour of the unique rise of one of hospitality’s success stories, Bill’s Restaurants.

The challenges for eating & drinking out 2017

Opening the valuable panel debate, chairman Peter Martin, the vice president of CGA, described operator/supplier relationships as ‘fundamental to the health of the market’ but under increasing pressure since the referendum of 23 June 2016.

The panel enlisted to examine where said relationships are likely to go in a ‘post-Brexit’ world featured Chris Hopkins, the commercial director for Mitchells & Butlers, Frank Bandura, the group CFO for Gaucho Restaurants, Paul Collins, the commercial director at Reynolds, and Phillip White, the corporate and logistics director at Brakes.

Setting the scene, all panellists concurred that operators are seeing unprecedented cost pressures. Since the referendum, the pound has fallen but the cost of raw materials and imports has risen. Chris Hopkins said that on the morning of 24 June, a £12m hole in his financial projections had appeared overnight. On top of this, operators have the national living wage and regulatory costs, such as salaries and rents, to contend with.

The pressure on the supply chain is acute. Food inflation is at 6% and the market is ‘flat’. ‘It’s tough out there’, so how do you generate growth when the market isn’t growing but prices are, and how do suppliers and operators work together in a mutually-beneficial way?

The headlines coming out of the debate included:

• Operator/supplier relationships are more crucial than ever
• Long-term relationships are important but operators need to ensure they’re getting the best value, so a balance of ‘old and new’ is good
• Operators don’t want to hold suppliers to ransom as their business can’t succeed if suppliers can’t succeed
• Margins mustn’t be squeezed too much as this will stifle innovation in the market place, and innovation drives growth
• Suppliers have to get close to their customers to make efficiencies without compromising on quality – at Reynolds, for example, they are checking that pack sizes are right to minimise waste
• Process innovation must be unlocked to create efficiencies – Brakes, for example, is trialling ‘robotic pick’ in its warehouses but it takes investment and patience
• Choice of British and overseas products must remain in the supply chain.  The UK cannot grow enough of certain produce (and the big retailers tend to have priority on these) and consumers want authentic experiences – Gauchos, as an Argentinian steak house, could not serve British beef!

In conclusion, the best supplier partners are those that fundamentally understand the needs of the operator and have the imagination and creativity to support this.  Chris Hopkins summed it up: “We want our supplier partners to have a clear understanding of our customers’ needs and the innovation and solutions to help me meet those needs better than I am today.”

Mark Fox – an accidental career in food

The morning’s debate fuelled many a discussion during the drinks reception and over lunch, where executive chef Simon Young surpassed himself with an impressive menu that delivered on every flavour level.

It was then the turn of Mark Fox, CEO, Bill’s Restaurants to take the stage. Clearly a modest man, Mark gave a brief overview of his career achievements. Mark’s career began at university when he combined his love of cars and pizza to become a delivery driver to help pay his rent. It wasn’t long before he was managing his own franchise.

After a career hiatus in the computer industry he returned to food as a district manager at KFC. His career with Yum! took him to Europe, where he worked in operations and franchising and learned an awful lot about business.

Back in the UK, some six years later, Mark was briefly courted by Restaurant Associates before being enticed back to Yum! as MD of Pizza Hut Delivery, where he successfully returned the business to growth and managed the sale of the dine-in restaurants to Rutland Partners.

Starbucks, a business that Mark admired, then came knocking. As MD of Starbucks UK, he took the business from being in loss to a profit of £35million in the first year.  With the UK business ‘fixed’, Starbucks wanted to incorporate it into one of its four regions. Not wanting to go overseas again, Mark looked for his next move and discovered Bill’s Restaurants.

Bill’s – the man and the brand

In 1987 when Bill’s was born, it looked very different to today.  The vision of William Collinson – aka Bill – it was a greengrocers. Bill was a greengrocer with a difference.  He saw the beauty in a tomato and laid his produce out to reflect this.  Soon becoming the ‘go to’ greengrocer in Lewes, Bill started offering quiche to his customers, which became as popular as the fruit and veg.

In 2000, disaster struck when the river broke its banks and the shop was completely flooded. When Bill reopened the greengrocers he also opened a café next door. It was the ultimate convenience store, with rustic décor and service with a smile, and very soon it turned over £2million.

Four years later in 2005, Bill opened his second store in Brighton.  However, he was not a businessman, and although both sites turned over £2million each, he made no profit.  He therefore sold the business, keeping a 10% share.

With the fruit and veg offer toned back and dinner added to the model, Bill’s went into rapid growth and in three years had reached 60 units. Such growth is difficult to achieve whilst maintaining the business’ culture.  With the team too close to see the issues, Mark came in as CEO in 2016 to build a strong structure and operating processes and create the right team and strategy to keep Bill’s in growth.

Mark’s strategy is built on four key principles: a clarity of purpose; having the resources to do it; having the right people to do it; and having a culture that motivates people to do it. Under Mark’s leadership, Bill’s is once again in growth and getting back into the rhythm of opening 8-12 sites per year.

The culture of Bill’s remains one based on people and relationships. Bill is still involved in the business, designing the restaurants, and remains a motivational figure held in high regard. Mark describes the culture as one of openness, authenticity and vulnerability.

Echoing the earlier panel discussion, Mark agrees that we are all operating in a challenging environment and its harder to achieve profit ambitions due to rising costs. “We need to peddle a bit harder to get through the next couple of years.”

He revealed plans afoot for Bill’s, including:

• A launch into the grab-and-go convenience food in the summer, which he described as ‘Pret meets Leon’. “You don’t have to sacrifice great taste and excitement for convenience”
• A continued focus on breakfast, which is ‘growing like billio’. “Without breakfast we’d be finding life much tougher than we are today.”
• Playing to its core consumer focus, the millennials, who eat out more often than anyone else (even if they are spending a little less) and seek out experiences not products with a more adventurous outlook on food
• In its current guise, Bill’s could reach 150-200 sites

And, looking at the future of the casual dining market, Mark believes:

• The sector is going to have a 2-3 year shake out period, with a decline of ‘ordinary’ businesses and growth of the more innovative. “There’s so much choice available now, you’ve got to be great. You can’t stay still.”   
• As well as breakfast, sharing is a growing trend but it’s a little trickier as it must make sense for the business from a profit perspective
• The biggest challenges for the next 12 months are recruiting and keeping qualified and engaged people; the staggering property costs; and driving innovation

At the end of his presentation, Mark engaged with the audience during a question and answer session that further explored his thoughts on the future of the casual dining market and wider eating out sector.  He was also asked the pertinent question ‘what makes a good supplier?’ Mark concisely responded: “The best suppliers tell the truth and engage with what you’re trying to achieve; making your life easier and contributing to helping you reach your end goal.”