A restaurant in denial

“In some ways we have tried to take a leaf out of craft beer’s book,” says co-founder Charlie Young. “Too many people are intimidated by how wine is presented. We didn’t want to focus on the formal side of things – we wanted it to be fun and very accessible,” he explains.

That was one of Vinoteca’s founding principles when it launched in 2005, and remains just as strong today. Co-founders Young and Brett Woonton met some 17 years ago when they both worked at Liberty Wines, before their shared viewpoints and experience in restaurants, bars, hotels and wine led them to navigate the tricky path of trying to get a business off the ground five years later.

They wanted to do things a bit differently, and challenge customers by offering wines by the glass – and not the usual suspects. “We never serve safe options, so the customer has to trust us,” says Young. But despite describing the business as “a wine bar and restaurant, with a shop”, he says that, actually, if you strip out shop sales – customers can buy the wine they enjoyed over dinner in their on-site shop afterwards – the split between food and drink is around 50:50, so, arguably, the business is “a restaurant in denial”.

Strong showings

Whatever the mix, it is leading to a strong performance across the business’s six sites in central London – its latest opening was in Bloomberg Arcade in the City, last November. Young says overall trading has been very good so far this year. “We are pretty happy, and have sites that are performing really well,” he explains. “King’s Cross is up 10% on the previous year, Chiswick is up around 9.5%, and City has started strongly, so we made money right from the beginning, and we expect this to grow over the next couple of years,” says Young. However, there is a question mark over the future of its Soho site. “The licence limits us to serving drinks with food, so we can’t do what we want with it,” says Young.

“We have got to weigh it up. We are not sure what the long-term plan is for that site, but it is one that we still love a lot, and there is no rush though because it still makes us money.”

The business has budgeted for £9m in sales this year – “and we will pull a healthy profit from that”, says Young. With the current estate that should grow to £10m the following year, he continues. This compares to £6.5m in sales in 2017, with most of the growth down to the opening of the Bloomberg site. “But we like to be conservative with our budgeting,” says Young. “We won’t put the same sort of expectation on sites that have done around 10% this year – so probably 3-5%, but then if they continue to grow in the way they are, we will easily beat that. While we’d expect around 1-1.5% from our mature sites.”

Eyeing up Paradise

Vinoteca is soon to dip its toes in regional water. Six months on from its City opening, the pair reveal they are due to open a site in Birmingham city centre’s Paradise development. The business has been in talks for the past year, and is now in legals. “If all goes to plan, we’ll get the handover of the site in September 2019, so we are talking probably spring 2020 before we open,” says Young.

It will be slightly bigger in size than its site at Bloomberg Arcade in the City, at 4,500sq ft if a mezzanine is put in. It will also feature an outside terrace, much like at its King’s Cross location, and there is likely to be more of a focus on drinks.

Young says they had been toying with the idea of opening a site outside London, and had done lots of research on Manchester and Birmingham because they felt those locations made the most sense for the business. It was also offered a site at the Oxford Westgate development, which Young says was an interesting prospect, but the timings didn’t work out.

“Birmingham is very under-serviced,” says Woonton. However, he says it’s important not to turn up as a London-centric business, acting like they know it all. “As our first site outside London, we have to be quite intelligent in regards to overheads and what we are taking on, as there are a few logistical challenges that come into play, and we don’t want to make it too difficult for ourselves,” he explains.

Capitalise on locale

Research is very important, and through that process there will be things that it will tweak, he says. There are two important aspects to consider as it expands, particularly in terms of its first regional location, adds Young. One is that they are not a cookie-cutter concept, and the second is the importance of engaging with the local people. “They have their own ways and habits that we really need to tap into,” he says. Woonton even hinted at the potential for a Prosecco bar offering, focused on quality. When it comes to Prosecco, “I think people are ready to trade up a bit”, he says.

Vinoteca is also planning to offer more wine-based cocktails across all of its sites, in order to capitalise on current trends, adds Woonton. “There will be a lot more visual equipment on the bar,” to add more theatre to drink production. “We are not a cocktail operation, but there are wine or vermouthbased cocktails that would suit our business, so we are currently working with our spirit suppliers to create a small list of these types of cocktails, and that will come on stream reasonably swiftly,” he says.

There are also more opportunities for innovation when it comes to non-alcoholic beverages for adults, over and above ‘the mocktail’, believes Woonton.

Exploring revenue streams

The pair have also just launched a wine club, where members are sent a hand-picked case of six wines each month, which Woonton believes has the potential to be a very good revenue stream for the business. “We are also able to bring in the restaurant side of it,” says Woonton. Members can come in for dinner and get their first bottle of wine at shop prices, and then a further 10% off in the shop. It will also be offering members first dibs for tickets to its events, as well as 50% off breakfasts at its King’s Cross and City sites, says Woonton. “People don’t currently think of Vinoteca as somewhere to go for breakfast – but this is another area we are developing,” says Woonton.

While Young adds that Vinoteca also has a strategy ready to implement around how to get weekends to work in the City. “We are just waiting on the last few tenants to move in and then we will start collectively marketing that,” he says.

The business is certainly happy with its ‘steady as she goes’ expansion, and with its Birmingham site now in place Young says there are no plans to expand the estate, “unless something comes at us screaming” – although he admits the business does get a lot of approaches from landlords about new developments. “It is a nice situation to be in as you can pick and choose, and you can also be sensible on deals, as you they want you more than you want them,” he says.

The comfort zone

The pair are also fully aware that the current climate might throw up some opportunities. “There are probably going to be some real bargains thrown at us,” says Young.

“There are going to be landlords clambering to fill spaces, and just break even for a while, rather than rinsing tenants,” says Woonton. “You never know there might be a small site that comes up that we think is workable,” adds Young.

“We have really expanded at our own pace,” he continues. At the time its second site opened, the pair considered opening one per year, but only if it felt comfortable. It was around this time that they did a minority deal of 10% with serial sector investor Paul Campbell, who had been one of their regular customers and had shown an interest in the business. “That is the only deal we have done,” explains Young. “But, more than money, we wanted him to be on our board. We are very comfortable and happy where we are and he has never pushed us.”

So would the business consider additional investment opportunities? Young admits they have had plenty of approaches from private equity and other investors, and although he and Woonton are happy not to be in a position where feel they need to, he didn’t rule out “perhaps doing another minority investment at some stage”.

Has much changed since the concept’s inception? “From the outset we wanted to match our wines by the glass with each of the dishes – we still do that and it is still a major part of the business,” says Woonton. “It gets people to try things they wouldn’t normally, and we can also turn over wines quite quickly by matching to the dish.” The fact it also has an on-site shop – a concept that was quite unique 12 years ago, still is today, believes Woonton. “It is a concept that still has a lot of mileage,” he believes.

Fun element to training

However, the business has certainly not stood still. “We think the best thing we can do is invest in service.” It is spending a lot on the investment and training of its people, says Young. “We are now putting every single member of staff who joins us, including chefs, through their first WSET qualification, as part of their induction,” he explains. And to top up the training of existing staff, in a slightly less formal way, they also have monthly Rodney and the Horse – their own brand wine, taken from their nicknames – training sessions, which are focused on their wines, philosophy, delivery methods and what they are trying to achieve, says Woonton.

“It’s all about engaging with staff, and adds a fun element to what we do, and it is also a good way to retain them,” he says. And now that is has a stronger training programme in place, it doesn’t have to recruit experts in wine. “We just need people who are willing and open – we can mould them into our philosophy on wine,” says Woonton.

Young says it is important for them to continue to innovate and grow the business, but while always addressing the core business model. “It’s about not standing still, doing the same thing, but bettering ourselves all the time,” adds Woonton.

The pair say they feel “really positive about 2018”. “We had a decent year last year, with a new site opening, and the other sites still in growth,” says Young. “You could argue that we should open more sites, but we know that in order to maintain that performance, we have to concentrate on what we have got,” he says.

Slow and steady wins the race as they say