A no-brainer of sorts

When I read the announcement that Steve Richards was leaving Casual Dining Group (CDG), I was surprised. And when I saw that it was to take the reins as CEO of Parkdean Resorts, I was doubly surprised.

My initial reaction was that Richards was leaving CDG after more than five years with the job still half done. My next emotion was disappointment that the irrepressible John Waterworth was retiring from Parkdean, his berth for the past 20 years. Each move was, in its own way, quite a shock to me. Until I started thinking about it a little more carefully.

In the case of Waterworth, the realisation was that it was definitely a case of job done. Under the Newcastle United fanatic, who once joked that “as a Geordie, English is my second language”, Parkdean’s turnover leapt from £10m to £430m. He oversaw its AIM flotation in 1999, was the architect of its merger with Park Resorts in 2015, and led its sale the following year for £1.35bn to Toronto-based private equity firm Onex Corporation.

In the case of Richards, I also soon started to see the rationale. It was pretty straightforward, to be honest. Having worked like a Trojan to navigate one of the UK’s biggest casual dining operators through the toughest cost environment in living memory, here was a man who wanted to run a growth business operating in a comparatively benign (compared to casual dining) sector with a better than even chance of building towards a lucrative exit down the line.

And don’t forget, it wasn’t just recent cost, consumer and competitive pressures that Richards has had to contend with. It is sometimes easy to forget that in 2014 CDG – or Tragus, as it then was known – was one of the first midmarket operators to go through a company voluntary arrangement to shed loss-making sites and cut rents.

The CVA paved the way for a debt-for-equity swap that saw control of the Café Rouge and Bella Italia operator pass from Blackstone to Apollo Global Management. As well as changing the company’s name, Richards also acquired a third main brand – Las Iguanas – reinvented Bella and attempted to restore the food credentials and authenticity of a brand, Café Rouge, that many believe is past its sell-by date and may even have had its frites.

All of which appeared sensible and rational and likely to give the business a decent future – until along came a potent cocktail of soaring costs, Brexit uncertainty and a lethal competitive environment. This led to the business again changing hands for little or no consideration last summer, this time with KKR taking the baton from Apollo via another debt-for-equity swap, albeit without the need for a further CVA (while Apollo has stayed in as a minority).

The extent of the impact was brought home by CDG’s recent 2018 accounts, which showed a £242m loss after the write-off of goodwill.

However, the accounts also provide evidence of the hard work put in by Richards and his team, with closures, rent discussions with landlords, investment in its restaurants and overseas franchise deals all having boosted the group’s financial position.

Such moves helped keep the group in the premier league as far as recent trading is concerned, with like-for-like sales up 2.6% in the 11 months since the year-end and by 4.2% in the most recent 13-week period.

So why didn’t Richards want to stick around to reap the fruits of his labours and put the £30m of new funds from the refinancing to good use in revamping 30 of CDG’s top units? The simple answer is that, with new owners, in the form of KKR, taking the reins, he would have probably had to commit to another five years, and even then the chances of seeing a big payday to make it all worth it would still have been, at best, a long shot. When Parkdean came knocking, it was a no-brainer, especially with Martin Robinson, his former chairman at CDG, now filling the same role at Parkdean.

What now for Fuller’s?

For a company that, throughout most of its 174-year history, has prided itself on its long-term focus and continuity of approach, the changes seem to be coming thick and fast at Fuller’s. You could argue that Simon Emeny’s appointment as the first CEO from outside the founding families back in 2013 was a big deal, but to be honest Emeny was so steeped in the business – he was even born at a hospital within 200 yards of the gates of the Griffin Brewery – that many people assumed he was a Turner or a Fuller anyway.

However, the announcement in January that Fuller’s was selling its entire brewing business to Asahi of Japan for £250m was a seismic shock, no question about it. Then last month, a series of boardroom changes – mostly sparked by the impending completion of the brewing sale – were announced, including the exit of Jonathon Swaine, managing director of Fuller’s Inns.

The elevation to the board of Fred Turner as retail director in tandem with Swaine’s departure may have raised a few eyebrows, but in truth they are somewhat different roles and with Swaine having been with the company since 2005, the last seven on the board, there had been talk that the 47-year-old would surely soon be ready for a CEO role elsewhere in the industry.

As for Fred Turner, his promotion was equally predictable. He is, by all accounts, a talented and personable individual who, even without the Turner name, deserves his success. At some point, if he wants to, he will surely become group CEO, though I’m sure Emeny has no intention of going anywhere anytime soon.

If there is to be further change over the next 12 months or so, it will surely be the retirement of Fred’s father, Michael, after more than 40 years, the last 12 as chairman. The big question is: who will succeed him?

Richard Fuller (now a non-exec)? Sir James Fuller (also a non-exec)? Simon Emeny? A heavyweight outsider? Or maybe Fred Turner could bypass the CEO role and go straight to chairman?!

My bet is one of the two Fuller’s non-execs, though given my fortunes during Cheltenham and the Grand National, I wouldn’t bet on it.

Dominic Walsh is a business reporter at The Times