Three by three is Arc’s inspiration

Martin Wolstencroft describes Arc Inspirations as “a 20-year overnight success story”. It is a line he is proud of (“Are you going to write that down, James?”) and is a pretty good summary of the evolution of the company from the opening of the Arc in Headingley at the turn of the century to its current multi-branded estate of 18 bars across the north of England.

During that time the group has extended beyond its Leeds heartland and adapted its formats to suit the prevailing consumer trends.

The bulk of this growth has been funded by cashflow, with the company only taking on its first bank debt two years. Last year it secured a new senior debt deal with Santander which nearly doubled its existing funding to almost £7m.

Assessing the options

With ambitious plans to double in size over the next four years the group is now assessing the best options to do that. Casual Dining Group chief executive Steve Richards was appointed to the board last May and in December MCA revealed the group had appointed AlixPartners to help it choose the right funding options.

Discussing his vision for the group during a study tour (bar crawl) of his venues in Arc’s heartland of Leeds, Wolstencroft could not come across as less of a corporate beast. He may now head up a business which is thought to be on track for a run rate EBITDA of £5m in the year to March, but his heart is still in operations.

During our conversation his eyes are constantly darting around the room tracking the demographics on show, the choices being made and the way staff are interacting with customers (either that or I’m just boring him). At one point he signals over a senior member of the waiting staff to urge him to correct a new waitress on the way she is holding a tray of empties. Before an intervention can be made, there is an almighty crash. Wolstencroft sighs. “Me and my bloody spidey sense.”

He is clearly in his element conducting a busy service and even more so when the guests of honour arrive for the evening. Wolstencroft, who describes himself as “a useful rugby league player in his day” regularly hosts the England team at his venues when they are in town. He is proud of the fact that the team are left alone to unwind after a training session at Banyan and don’t have to worry about staff snapping pictures for social media, as they say can often be the case. They certainly don’t have to worry about this reporter, who couldn’t be more clueless about the game with the funny-shaped ball, when he insists I meet some of the players and the coach.

Opening in clusters

We are in Leeds so that Wolstencroft can quite literally walk me through his strategy of growing in clusters around three core brands – Banyan, The Box and Manahatta.

We begin at Banyan, the values of  which Wolstencroft describes as “beautiful, stylish and genuine”. The concept trades all day with a wide-ranging menu taking in power bowls, pies, curries and a selection of dishes from the grill. The dessert menu features an instagrammable “indulgent sharing dessert”, combining chocolate & raspberry brownie, mini strawberry & apple crumbles and mixed berry cheesecake topped with berry compote. The design is light-touch, capitalising on the venue’s heritage as the former city post office, while incorporating the dark woods and brass colour schemes running through the brand’s other iterations.

We move on to the Box, which opened in the autumn following a £1.3m investment. Wolstencroft describes this one as “your favourite bar to eat, drink, play and party”. This concept features a smaller range than Banyan with a strong sports focus.

The food offer centres around burgers and pizzas with bubble waffles carrying an array of toppings as the singular dessert option. The venue espouses one of Wolstencroft’s key focuses – the need to deskill the kitchen yet maintain standards. He even lets me loose in the kitchen where the staff train me to use the pizza proofer and imported oven to create a dish in under two minutes. I manage to come pretty close on my first go – well under half an hour certainly.

Changing face of eating out

He says: “Eating out has changed dramatically in my time in the industry. The days of people going out with the aim of  having a three-course meal are gone. These days it’s just one part of the experience. You have to do so much more around the food offer but you still have to deliver a good product at a good price, served quickly and that looks good enough to take a picture of.

And for the operator it also has to have a good margin and be produced by the labour we can afford.

“At The Box, we spent a lot on that kitchen and the menu to be able to deliver a menu that ticks all those boxes. What it means is that we are not dependent on the personality of a high-paid chef because when that chef leaves, we have to start all over again and all the wheels fall off.

“We have a system that is a machine, and the staff we have in there are really well-trained and motivated because they are producing a product everyone can be proud of. Because it is a deskilled kitchen doesn’t mean it is a sub-standard product or that it’s anything to be ashamed of.”

The Box also features Arc’s first foray into draught cocktails – with a Pornstar Martini and Espresso Martini on tap to speed up service at the bar. Wolstencroft said the former was Arc’s best-selling cocktail across the estate over the Christmas period. It also boasts the latest craze – a shuffleboard (“Have you ever shuffled, James?”)

Our last stop (and by this point the notes get a little hazier) was at Manahatta, Greek Street – the second iteration of this concept in the city. Wolstencroft describes this brand as being about “shameless glamour”, with a New York theme and a cocktail focus, complemented by a menu that sits somewhere between the two sister brands.

No worries about cannibalisation

At this point in the trip, we have travelled all of 500 yards, yet Wolstencroft insists cannibalisation is not a concern.

 “Leeds has shown us that these brands can work side by side”, he says. “The Box did two weeks of £100k over Christmas. Still Banyan was up 6% on a like-for-like basis and Manahatta was 12% up. They complement each other in different day parts and for different occasions. What we can do is offer customers something across a range of occasions.

“What gives us our edge is that our brands are set up to be flexible. We’re not setting out to be associated with one particular dish or offer. We do great bars with a great food offer. But, we can flex that with changing consumer trends. Fixed brands come and go, but we can adapt to the conditions we find ourselves in.”

To do this in his own backyard is one thing but how will Wolstencroft manage to replicate this success in new areas? The brand will debut in Newcastle (at the former Jamie’s Italian) on 29 March (“I’ve never missed a deadline yet so you can put that in your magazine”) and Wolstencroft is aiming to have three sites open in the city within two years. In the same timescale, he hopes to add a Box in Manchester to complete the set and this year wants to dip his toe in Liverpool.

He says: “It’s not easy – the difference between two sites on the same street can be huge – and it takes a lot of experience and knowledge to know that. I’m well aware that we’re going into areas where we don’t have that local knowledge up front.

“We’re doing a number of things to help with that. We have taken on Nik Lowery as property director. He’s been with Revolution Bars and Greene King so he has great contacts across the country.  We are meeting demographic experts to support us to make our decisions, so we can scientifically justify the sites we choose.

“At the moment we’re looking at Liverpool and we have our operators camped out there, seeing what’s going on. You have to ultimately have a bit of a sixth sense and really pound the streets.

“Then the challenge is to get your name out there and communicate your brand. It used to be enough to put up the hoardings and people’s interest were peaked. Now, social media is the new shop window.”

A reputation as a good employer

As the company grows, so does its structure and Wolstencroft is proud of a culture that fosters internal promotion – with most of the senior team members having worked their way up from the bar, including managing director Anni Opong.

He says: “I think our culture is the thing I’m proudest of. It means people stay with us and that we build a reputation as a good employer. We’re don’t pay the highest salaries but we do create fantastic cultures.”  

The very uncorporate Wolstencroft is going to have to spend a lot of time in boardrooms over the coming months but knows this is a necessary step in this particular arc of progress.

He says: “Last year we opened three new sites and reinvested in another – that cost £5m. We can’t keep up that pace of investment with cashflow alone and in the current climate banks are less willing to lend. We need new avenues to fund our ambitions – and we have big ambitions.”