The Azzurri Group, operator of ASK, Zizzi and Coco di Mama, has hailed 2015 as a transformational 12 months for the group, after reporting a 16.5% increase in EBITDA to £31.8m for the year to 28 June.
The Steve Holmes-led group, which was acquired by Bridgepoint in January, saw sales increase by 6.6% to £217.7m, in a year in which it invested a record £18.6m on seven new restaurant and 35 refurbishments and transformations (ASK 21, Zizzi 14)
The company, which has secured £120m of new senior bank facilities, said it had delivered exceptional results with like-for-like sales growth, new openings and margin expansion driving the growth in EBITDA.
The group is set to launch Zizzi in Ireland, with sites for openings next year already secured in Victoria Square, Belfast and Dublin. Holmes told M&C that he believed the group could open between 10 to 20 sites in Ireland over the next few years.
During the year, the company acquired the fast-casual Italian concept Coco di Mama. It has opened two sites under the brand since acquisition (Bankside and Ludgate) and is planning to accelerate its growth to over 40 outlets over the next few years.
Holmes, who said the search for a new managing director of ASK continued after Jason Thomas stepped down earlier this summer, said: “The pace of innovation within our brands has continued to accelerate to meet customers’ growing demand for high quality and interesting food.
“Looking forward, we have a strong pipeline of around 20 openings in the next year for ASK, Zizzi and Coco di Mama as well as plans to expand Zizzi’s geographical reach into Ireland for the first time. The ongoing success of our brand transformations and continuing innovation in all areas of the business give us significant confidence in future growth.”
For the period under review, the group employed approximately 5,600 people, serving around 14 million meals a year in its growing estate of over 250 restaurants.
Comment by M&C editor Mark Wingett
Four years ago I wrote, around the time speculation had started that the Gondola Group, operator of PizzaExpress, ASK, Zizzi and Byron, was to be broken up, that ASK was a strategic problem child for the group. Positioned at the time as a halfway house that looked to combine the best of both its sister Italian-based brands, I always felt that ASK missed out against PizzaExpress’ wider appeal and the recently started investment programme being carried out at Zizzi, which was allowing it to compete with Jamie’s Italian and Carluccio’s.
My view on the brand was wrong, according to then Gondola chief executive Harvey Smyth, who invited me to meet up for a discussion on the merits of the brand and how its own recently launched investment programme would provide the impetus the format needed.
At the same time, I put forward that a private-equity play of for both ASK and Zizzi in concert with an experienced operator, say Kevin Bacon, formerly managing director of both The Restaurant Group and Jamie’s Italian International, would also make sense.
It may have taken longer than Smyth planned, and a number of tweaks along the way, but ASK is repaying that faith and investment, as is Steve Holmes, surely one of the most underrated operators in the sector. It has also helped that both brands have been able to come out from the shadow cast by PizzaExpress and the meteor-like Byron. There is now a consistency to the offer, which is coming through in terms of sales and cover growth.
According to Holmes, both ASK and Zizzi achieved strong growth, particularly in the first half of the year, with sales momentum in both brands underpinned by the continued development of the core proposition and further investment in our estates.
Although he acknowledges that the latter half of 2015 has been more challenging, he says that so far year-to-date, both brands are in good growth. He said: “It’s been very encouraging. ASK is stronger on the family side of the business, twice as many families visiting ASK than Zizzi. Both brands are highly complementary, appealing to a broad customer base and lending themselves to different occasions. Typical spend per head (including value added tax) is averaging £19 across both.”
Holmes said that the transformation of ASK was a key driver of the positive results. He said: “85% of the estate has been transformed and that process will be completed next year. Zizzi was fully invested at the end of the year and is showing strong like for like growth. Zizzi is hugely successful, its average weekly sales are up there with any successful casual dining brand. The new modern, rustic design and innovative menus have delivered significant growth. We sell twice as much alcohol in Zizzi as in ASK and the focus of the consumer has switched, it used to be pizza and beer, but now it is pizza and cocktails. We opened three new restaurants in prime locations (in Stratford upon Avon, Telford and Glasgow Silverburn), taking our estate to 136.”
Earlier this year, the company announced it would look to add 20 new sites to its estate going forward, split between six to eight new ASKs; six to eight new Zizzis and six to eight Coco di Mamas.
The company opened four new ASK sites during the year, taking its total to 112 and Holmes said that it would look to accelerate its focus on opening premium sites in city centres. He said: “We have more ASKs in the pipeline than we have ever done.”
Speaking to M&C after his promotion to chief executive for both brands last year, Holmes said that he believed there was scope to operate up to 250 sites under the ASK brand in the UK. He said: “It is an extremely competitive sector but the potential is there for the brand. When I joined Gondola it had c200 PizzaExpress now it stands at c450, so there is scope to grow from the current mark to 250.”
With a fair wind, you can add to that figure a possible 100 sites under the current eight-strong Coco di Mama brand, with Holmes reiterating that he believes the concept can get to 40 units within the next three years, all in the capital.
Holmes said: “The acquisition of Coco di Mama was an important step in our ambition to become the UK’s leading specialist in Italian cuisine. It is a phenomenal business. It re-enforces our ambitious growth plans and ambitions to break into the fast casual market. How fast they can produce the quality offer they produce is sector leading in our eyes. The recent Bankside opening has been the best opening for the brand so far. What we are able to give the business is support, funding and infrastructure to expand quicker.”
Asked about the potential for Coco di Mama, on which the group’s long-time advisor Theo Randall is already involved, outside London, he said: “Pret A Manger has got about 100 in the City and a similar number in the West End and we’ve only got eight. There’s plenty of scope in London before we go further afield.” Coco di Mama currently serves around 30,000 customers a week at an average spend of £4.
And is this growth sustainable? Holmes says: “It’s competitive for sure, but there are still opportunities for growth, especially for ASK in major cities, for example we are still to go into Bristol and Leeds.”
Holmes and Azzurri, of which Smyth remains chairman, has not been shy in saying it is looking grow in terms of further acquisition, with another move into the fast-casual/food to go market rumoured, and even an international purchase mooted, but Holmes says there is nothing on the cards as the moment. He says: “Are we looking at more opportunities, yes. Is there anything happening at present, no.”
The investment in both brands, the backing of Bridgepoint, the acquisition of Coco di Mama and the potential for further strategic acquisitions means Azzurri is well on the way to becoming a major player in the UK eating-out market. Under Holmes the business, especially ASK, has matured and left its growing pains behind.
