It is less than a year into his stewardship of the Richard Caring-backed group and Mark Fox has been busy putting in place the foundations to make sure the company can return to the expansion trail in better shape than it left it, while also getting ready to take a bite out of the grab-and-go market. Mark Wingett reports
They say size is everything. For Mark Fox, chief executive of Bill’s, the 76-strong restaurant group, the question of size means a gentlemanly disagreement with the group’s principal backer Richard Caring over the potential of the business he started leading last May. While Caring, who has backed the group’s growth since 2008, has long touted 200 as the possible number the current 76-strong chain could eventually get to, his new chief executive is more comfortable with a range between 150 and 200.
Fox says: “My gut feel it is somewhere between those two. The rate of growth as we get closer to those types of figures will be slower than it is today. I am very comfortable that there are another 50 locations we can go into right away without any worries around cannibalisation of trade appearing. So I would say there can be a minimum of 150 sites for Bill’s, which is double where we are today.” And today the business is in a different place to where it was when Fox, the former Starbucks UK managing director and Pizza Hut delivery managing director, found it last May.
Then the group was getting to grips with having opened about 60 sites in three years and the operational inconsistencies that threw up, alongside a joint managing director model that was starting to show signs of failing. The group had already started to unpick some of the issues, by making one of those managing directors, Roberto Moretti, the group’s new chief operating officer, with the other Scott MacDonald, reporting to him. Unsurprisingly, the move lasted just six months.
Fox says: “The owners realised that the business needed a different type of leadership, which is not to say the previous team did a bad job, because they didn’t, it is a £110m business now and when they joined it was a £15m one. All the shareholders understood that the pace of growth was part of the challenge.
“For anyone to do 45 new openings in two years is a challenge, especially to keep evolving the format at the same time. The challenge was that the group was still structured like a small business, not a £110m one. The shareholders spotted that and the guys who had taken it to that level didn’t quite realise or understand what was now required because it was very different to what they were doing even two years previously.
“The way you run a scale business doesn’t naturally work with two equivalent paths that are separately led, it has to be cohesive. That model might work at a smaller level, because you can bring those two paths together informally, but once you need to get a message across to a national team, to get it out clearly, you can’t really do that from two silos.”
Business evaluation
Fox spent his first three months with the business exclusively in restaurants. “I met all the management team before I joined the business and then spent three months walking around the sites,” he says. “I haven’t visited every site yet but I am getting there. I have spoken to everyone, from KP to operations managers to get a feel of what was required. It was pretty much as I anticipated, we need clarity, clear structures and what was expected of each individual.”
He has changed parts of the management – bringing in Ron Lento from Whitbread as innovation director; Nicola Frayne, previously at Whistl and Unite Group, joining as chief people officer; and Catherine Salloux, formerly of ASK, as marketing director. Fox says: “Of the current team, the vast majority, have experience in operating in companies that are significantly bigger than Bill’s, so are all familiar with what is needed to get messages across and get processes through to the front line. We then restructured the next level below that as well, to really focus on the food, to make sure food and service was at the centre of what we do.
“Credit to the core of the Bill’s team, despite all of the stress that growth put on the system, the consumer experience was still reasonably good. If you look at the NPS scores or our mystery diner feedback, we didn’t crater from a customer experience point of view, what we didn’t necessarily do is evolve or improve at the kind of rate we needed to in order to remain current.
“In terms of problems with consistency, it was unusual to get a total nightmare experience in a Bill’s, you may have got an experience that was less than your expectations maybe, but not a complete disaster. Whereas, in other businesses I have worked in or watched, it can be a complete disaster from start to finish, we don’t have any of those. When I look at the complaints we get, it might say this or that didn’t work but, overall, it was an OK experience.”
Fox says that he is incredibly lucky to have the shareholder group, which in-cludes Andy Bassadone and Chris Benians, to call upon. He says: “The experience Chris, Andy and Nick Fiddler have is vast. Then you have Bill (Collinson), a founder who has been in the business for 17 years, who is still actively involved, especially on the design side, and you have Richard, who operates at 50,000ft and gives you a very clear vision of what’s going on and what’s going to happen in the future, and that we are properly capitalised. I talk to Richard regularly and he cares about the business massively. I then have that expert panel of four, which covers food, operations, finance and store design, which I refer to on a much more frequent basis as the business evolves.”
As I said at the time, Fox’s appointment was viewed as the first stage in what backer Caring and shareholders Bassadone and Benians, will hope will be the sale of the business they first invested in nine years ago.
Fox says: “Richard is not in a massive hurry to sell the business, but at some point he and the other shareholders will look to cash out as they have been in the business for eight or so years now. I am under no pressure to make that happen and I would say that right now is not a good time to do that, macro-wise it is not a good time to sell a business and I don’t think I have polished the business to the degree I want in order to maximise the value or ease of transfer.”
Pick up the pipeline pace
Having slowed down in terms of expansion, Fox is keen that a new pipeline of openings is put in place. A new look, aiming to capitalise on the group’s strength at breakfast and lunch but also boost its evening sales – with more emphasis on the bar area – is already reaping benefits at the recently launched sites in Chelmsford and Southampton. Other openings are already lined up for Canterbury, Braintree and London Victoria.
He says: “In our 2015-2016 numbers, we opened nine sites, which is still a lot even though we took our foot off the gas. We identified then that we had a chunk of work to do but in order to ensure we had a pipeline, we needed to start putting the gas back on again. We are now starting to fill that pipeline but, apart from Victoria, there will be a lag before it starts to kick in. This fiscal year, which ends in July, we will probably open six new sites. There are still plenty of places across the UK, where Bill’s hasn’t gone. We still only have one site in Scotland. I am determined we will do more there, and are in talks on sites in Edinburgh and Aberdeen.
“Although the growth was rapid, we don’t really have a tail. As I look at our estate, two restaurants sit in the ‘not where we want them to be’ in terms of performance category, with another four or five where we are comfortable where they are heading, the rest are in a good place. I consider myself lucky that the challenges of managing a tail are not ones I have here.”
Little Bill’s lined up
The company saw turnover climb 20.5% to £110.5m in the year to the end of July 2016, with EBITDA increasing 8.9% to £13.5m. It is on track to post turnover of more than £115m in its current financial year, with EBITDA to grow to up to c£15m. Fox says: “It is modest growth
compared to previous years, but expected after decelerating unit growth. As we look forward, we have a plan for continued top-line growth, but with a likely smaller or-ganic growth number in terms of new sites. We will see fairly subdued like-for-like growth over the coming year and meaningful but relatively slow unit growth, compared to previous years. All things being equal, with improving underlying operational innovation, we should start to see underlying sales growth improve.”
Fox hopes that some of the growth will be driven by the group’s upcoming launch of a grab-and-go format, developed under the working title “Little Bill’s”. He describes the new format as “Pret meets Leon with a difference”. The group is close to securing one or two sites in London for the format and, if it tests well, Fox believes the company could eventually open 300 to 400 sites under the brand.
He says: “We went back to the drawing board with Little Bill’s. I challenged the guys about what we were actually trying to achieve with the concept. The original conception for the format was a Bill’s in a smaller footprint – a cut-down version of the brand. I wasn’t sure that was realistic for the occasion or in terms of delivery. We are very much now focused in on the convenience, grab-and-go, eating-on-the-move occasion. There will still be the ability to sit in, but it is much more of a grab-and-go concept.
“We are well progressed in terms of menu and in terms of unit design. We are in talks on a few sites at the moment and hope to exchange on one or two over the next month and expect to have the first one open this summer. The first one or two are likely to be in London, with the intention that you then quickly take it out to the regions. What we don’t want is this to distract from the core concept. For me, logically, it could sit down the street from a Bill’s because the whole experience will be different and a very different eating occasion.
“It’s hot food, as well as cold food, slickly served. It will all feature takeaway packaging and is very much convenience food but based on fresh, seasonal and British products. While there are some concepts out there, which are great from a culinary or design perspective, there aren’t many on the hot food side where you could be served in a minute. We also have a separate development kitchen for the concept. My background in QSR is quite handy, in as much that the service standards in that segment are very clear. You will get served within five minutes and then from order to delivery of your food is a minute. There aren’t many concepts on the hot food side that can serve you under a minute.”
If the grab-and-go concept tests well, Fox believes the company could eventually do 300 to 400 under the format.
“If you look at Pret’s estate today and the aspirations of some of the other players in terms of growth, the size of property you need, I think it is sustainable at 300 to 400 units, in the fullness of time,” he says.
“How quickly you get there is a different story. What we do know is that we have a group that knows how to grow quickly. If it does test well then we will grow it quickly to demonstrate that, beyond London, we have a concept that is scalable. Even if we don’t test very well and it takes us longer to get it right and expand, we know that we still have about 80 new units of the core brand to work on.”
Fox is also looking to develop the group’s teams and again provide a level of consistency for both its c3,000 employees and customers. He says: “Things were moving so quickly that the plan was just to look at the next opening, the next month; we are now looking at the next year to 18 months and even pushing that out to the next three years, so we can start to be consistent. You can’t expect consistency at a restaurant level if you are not giving a consistent message from the centre.
“The training here was very personal and informal. I have met more talented people in this business than in most of the places I have worked in. We have some incredibly long-serving staff members. We just had our first big conference for everyone at Hawker House. We brought in long service awards and I was quite amazed that we do a five-year and a 10-year long service award, bearing in mind how old the company is. We have one 15-year and one 20-year service award, people who worked with Bill at the start. That underlines my point that there is a core of incredibly committed individuals that know what Bill’s is all about, have that DNA deep down and have stopped us going off the rails completely, while there has been a massive influx of new people. There is a lot of people who have joined the business in a short space of time and clearly haven’t yet been fully inducted to the brand, that is what we need to capitalise on.”
Training in service
With that in mind, the company has been closing all of its restaurants over the course of three weeks for two hours each to retrain every waiter and waitress on the level of service that is expected at Bill’s. Fox says: “We want to go back to square one and focus on the functional and emotional needs of our guests, and make sure we are very clear on what Bill’s service is and how distinct it is from everyone else’s. Of the total emails we get, 40% are enquires about booking a table; 30% are pure complaints; and the rest are compliments and I have never seen so many just off-the-cuff compliments about people’s experience than with this business. That is, ultimately, the thing that is special about Bill’s – the service but its doesn’t get talked about because it is hard to measure, too fluffy. However, when we get it right it is truly distinctive. We have to keep raising the bar on that.”
There is a lot of moving parts at present at Bill’s, especially against the backdrop of continuing sector headwinds, but Fox is pretty bullish about the rest of this year.
He says: “Notwithstanding cost pressures, which we are having to plan for and find ways to simulate, but from a customer’s standpoint, if you are good operator, it can be an OK year.
“If you look at the two-year period from July 2015 to July 2017, that period has effectively been a consolidation period for the business, bringing things together operationally, structuring the business for further growth. We are getting to the point where we need to push on again and I am excited about that.”
