Kaizen chiefs

The Japanese notion of kaizen, ‘continual improvement’, is one that the senior team at 10-site ramen restaurant brand Tonkotsu have at the heart of their business.

Managing director Stephen Evans, who joined the business two years ago (previously consulting for them), says: “We want to keep evolving. I believe lots of recent casualties in the industry have been through lack of investment and evolution. Our industry has a very set model of doing things and it is difficult to step out of it. With our 10 sites, we aren’t afraid to try new things and see if it works.”

Evolution and innovation are in abundance at the company which was founded in Soho in 2012 by Ken Yamada and Emma Reynolds. Among many enhancements to the business in the past year has been a partnership with engineering Masters students to improve equipment efficiencies, a new customer service journey, an experience-led mystery dining scheme, and an increased package of staff benefits, as well as product extensions to its Eat the Bits chilli sauce (which sells 8,000 jars a year), and the implementation of systems including Trail, Agora and Harri to help position the company for further growth.

Tonkotsu currently has nines site in London and one in Birmingham, with the largest its 140-cover Stratford restaurant near the London Stadium, and the smallest its food-to-go counters in Selfridges in London (opened six years ago) and Birmingham (two years ago).

To help fuel its next phase of growth Tonkotsu is in second stage talks with a number of potential private equity houses which, Evans says, “is very much our route of choice for development”.

“We want to be involved with people who understand the business and have the capital to help us grow on a financial and strategic level. It is a difficult time to do this, but good brands still attract the attention of good operators and private equity outfits and we are definitely seeing that.”

Since MCA went to press it has been rumoured that YFM Equity Partners, which also backs Friska, has taken the lead in negotiations.

Ramen the message home

Tonkotsu’s food offer focuses on homemade noodle ramens (including its best-selling Tonkotsu ramen with roast pork belly), gyozas and hiyashi ramen salads. Around 50% of food sales are delivered at lunchtime, with its set menu of a small ramen and side for £9.95 launched 18 months ago, accounting for 40% of sales (Evans says the high take-up in the optional trade-up drives spend back up). The other half of sales is delivered by quick meals in the evening.

As Evans says: “Our customers will have a quick ramen before catching their train home or have a quick lunchtime meal. We turn covers quickly which gives us the opportunity to do smaller restaurants.”

The company opened four sites last year, with its most recent a 50-cover restaurant in Ealing Broadway’s Dickens Yard. Three sites are planned for 2019: Rye Lane in south-east London’s Peckham, which the company hopes will open this summer, a Shoreditch site in the autumn, plus a third if the right opportunity comes up.

Evans, whose CV includes five years at GBK as development director in the turnaround team, says: “We are opportunity led. We are conscious that whenever we go somewhere new there is a ramen and brand education piece to. Our ideal site is 80 covers, ground floor only with a rent under 100k. The market is very much freeing up and hopefully we will open a third site this year, but we aren’t tied to it.”

He adds: “We would like more penetration in London and feel there is plenty more scope for that, but equally there is more scope outside London. Birmingham has been a good test of how we operate outside the capital, with things like logistics and training which are so important to get right. We would like another site in Birmingham.”

Evans says food halls are potentially another growth opportunity for the group. He says: “The Selfridges sites are neat sites, quite easy to operate and very strong. The new food hall in Battersea could be a good complement to our current site there. The economics of a Box Park just don’t stack up for us, the concession model is very different. It’s a bit more of a partnership.”

Pop-ortunities

Further residencies and pop-ups are also possible, with the company just completing a year-long residency at London’s St James’s Market. Evans says: “Residencies offer a great opportunity for staff to progress. We would do more, and are opportunity led, but ask ourselves are the upsides, be it people, commercial or brand, worth it?”

The company is also targeting half a dozen pop-ups in 2019, with plans including Goldman Sachs bank and building on last year’s success at the London Seafood Festival at Battersea Power Station and Time Out’s ‘Battle of the Broths’.

Tonkotsu opened its largest site in Endeavor Square in the International Quarter in Stratford last July, the bigger scale of the site offering the opportunity to capitalise on London Stadium events including West Ham games, big concerts and shoppers from nearby Westfield.

Evans says: “It is great to be part of the Olympic legacy. There is a new building opening every six months there over the next couple of years, including another V&A Museum which will also bring different customers than we have now, so there is lots of opportunity.”

The company is also growing the events side of the business including whisky and sake tastings. A 10-cover private dining room was also created last year at its Mare Street site, which Evans says is working well, and further private dining areas could be introduced in future.

Average site food sales at Tonkotsu are 65% and its senior team are very proud of its “real ramen”, with key component parts – noodles, bases and broths – made themselves to methods used in Japan at a central kitchen in East London, which helps the brand deliver consistency. All its fresh noodles are made with kansui (alkaline salt) imported from Japan which gives the noodles more elasticity and bite. Fresh prep including marinating, chopping and dicing is done by kitchen teams at site level.

Co-founder Yamada, who along with other founder Reynolds is still very involved with strategic projects and brand enhancement, goes on up to three inspiration and supplier trips to Japan every year. Menus change in spring and autumn, complemented by a rolling programme of six to eight specials through the year, with menu development and execution supported by executive chef Lukasz Tomczyk.

Tonkotsu’s partnership with UCL’s mechanical engineering Masters students, which began in September, is also reaping rewards. The students’ industrial project work includes developing equipment ideas for a bigger central production kitchen, which the company hopes to create in the next couple of years. Evans says: “There are some ‘gizmos’ in test at the moment. It has been great having a fresh set of eyes on things, with the students bringing a much more objective lens.”

Delivering sales growth

Deliveroo is Tonkotsu’s delivery partner, with sales in the “mid-20s” of total food sales and over-indexing at smaller cover restaurants as incremental sales, including its 18-cover Notting Hill restaurant. Evans says: “Delivery is just one layer of our business. I would like to do more of what retailers have done and be more omni-channel and push click and collect too, push more loyalty, and do our own delivery to capture more data.” The company has also sourced more sustainable delivery packaging, now including only one plastic box.

Tonkotsu continues to grow the events side of the business, already offering pre-booked whisky and sake tastings.

While whisky and sake sales are important to Tonkotsu, ramen-friendly beer accounts for a “big chunk” of drinks sales, with Kirin Ichiban (its only draught beer) its bestseller. Evans says: “I find beer is getting expensive in restaurants. We are trying to hold our own price wise and customers can get a pint for under £5, which is almost unheard of at present.” The company has seen success with a collaboration pale ale beer with Mondo brewery and a white label sake, produced for them by a Japanese brewery. A white label beer brewed by Magic Rock Brewery is planned for Q2.

Tonkotsu now employs 170 people and the past 18 months has also seen it improve its staff benefits package including introducing Perkbox, including an employee assistance programme, five and 10-year service sabbaticals and more mental health support. Evans says: “We have launched lots of little things which don’t cost the business lots of money,but add up to something substantial for lots of our team.”

The company has also implemented more video training to enable team members to absorb information in more learning-conducive environments such as on the bus to work, and this month is introducing five buddy trainers with the aim of having one in every site. The buddies will help ensure the “softer cultural things in the business” get done straightaway and provide another person team members can go to ask questions or for support.

With one in six of Tonkotsu’s team from a different country, Evans is keeping a watchful eye on Brexit. It is the brand’s diversity of team and customer base that he believes creates a “lovely culture”.

He says: “The respect of different cultures and beliefs, and one of our core values, is the Japanese concept of ‘omoiyari’ (sympathy, or consideration). To this end, we are actively seeking a female chair. The casual dining sector is male-heavy and isn’t representative of our business as a whole, so recruiting a female chair will help us take a different perspective on things.”

The kaizen continues.

■ Jo Bruce is a freelance writer specialising in the food and drink sectors