While the majority of the sector is finding the current climate challenging, Wagamama has gone back to its roots to come out of a period of stagnation and is now driving forward, reporting double-digit growth in the process. Mark Wingett talks to chief executive David Campbell
It will be three years this September since David Campbell took over as chief executive of Wagamama. For him, his time in charge of the Duke Street Capital-backed group, has felt “like a long time, but also a short time”, summing up the job he initially faced and the rewards the initial work put in is now reaping.
A relative unknown inside the sector, the former head of London’s O2 Arena, and the man once tipped to succeed Bernie Ecclestone as the head of Formula One motor racing, took on the top job at Wagamama after the role was left vacant by the sudden departure of Steve Easterbrook in April 2013. Easterbrook had spent less than a
year in the job, following a similar short stint as chief executive of PizzaExpress, before returning to McDonald’s and, in time, to its top role.
Campbell is a veteran of the entertainment industry and had previously turned the O2 Arena, the former Millennium Dome in Greenwich, into the world’s most popular music venue. Before that, he worked for Sir Richard Branson’s Virgin Group for 11 years rising to become boss of Virgin Radio and masterminding the sale of the station to Scottish broadcaster SMG for £225m.
So you could argue he had the required skill set to pull Wagamama out of the state of flux it had found itself in since Duke Street Capital acquired the business in 2011 for c£215m from Lion Capital. The business, through the departure of long-standing chief executive Steve Hill just over a year after the deal completed, coupled with Easterbrook’s short stay, was in trouble of drifting to the edges of the sector. One of the ‘Champions League’ casual-dining brands in the UK, was threatened with a drop to the ‘Europa League’. Indeed Stuart Wright, head of insight at Wagamama, recently told MCA that the brand had become functional and distanced from its values.
Campbell has not only tapped into the brand’s DNA/values, but also rejuvenated his management team, brought in more experience; rebooted its international expansion plans, particularly its US growth strategy; and refreshed its UK portfolio.
Refurb numbers to rise
Before he took up the role, he also made sure he had done his research into the brand launched by Alan Yau in 1992, reading a copy of Way of The Noodle, the book Yau claims not to have written but which sets out the philosophy of the brand. Campbell says: “My take was ‘that’s the bible, that’s the playbook’, let’s go for it… it was also nice someone had written the plan for me! I think it was probably too focused in the kitchens and not focused in the front of the restaurant and telling people about what it did. We were running, but not hard enough, or in the right directions.”
To change that, Campbell said he invested in a massive market research campaign, interviewing 5,000 customers in the UK and US. “It’s what drove us, for instance, to do things like take the kitchen from just being a slot in the back of the restaurant, to our most extreme in Uxbridge, putting the kitchen in the front window of the restaurant.
“Now any new restaurant we build, you walk past the kitchen the minute you walk in the door, that’s really important, because people see the food being prepared in front of them. For Millennials or whatever you want to call that generation of people today, that is far more important than it ever was before.” The company said it would do 20 refurbs this year, but Campbell thinks that will be now north of 30.
Speaking before the group’s sale to Duke Street, Hill had touched on the potential for Wagamama in the US, even claiming it could do “hundreds” of sites over The Pond. Campbell is a bit more pragmatic but believes that by the end of this decade, he and his team would have created a global brand. It has taken significant steps to make that a reality over the past few months, signing deals to launch in France, Italy, Portugal and Spain, plus securing its first two leases in New York, to go alongside its existing three sites in Boston.
Campbell believes there is a “significant opportunity” in America for the business and that it could expand quickly once it has achieved scale in New York and Boston, however, he points out growing further in the UK remains the bedrock of the brand’s success for the time being.
He says “We are seen as a young, trendy brand in the States, whereas here people don’t write about us at all or view us in the same way. I spoke to the guys at Shake Shack about this and for them it’s the flip side of that, they are seen as a cool, young brand here but not any more in the US, where they are seen as a chain.”
International sites targeted
To achieve its goal of becoming a “truly international brand”, Campbell has added more experience to and restructured the group’s management team, including Jane Holbrook moving from chief financial officer to chief operating officer; operations director Sarah Hills becoming UK
managing director, Julia Rosamond moving from Travelodge to become the group’s people director and Steven Boyce, property director. At the same time, it promoted Adam Gregory from regional director to managing director of North America.
He says: “I don’t think we’ll get to the scale of PizzaExpress or Nando’s, but we’ve definitely got room to grow in the UK. Starting as an urban brand and going into New York got us thinking about London a bit more. It started in London, but it really hadn’t opened that many restaurants in London. As leases come up, we’ll get out of basements and out of slightly more obscure places and come above ground and recreate the brand as it is today within London.
“In terms of the executive team, I want people who know what they are doing, it’s not a place for learning, we know you are good that’s why you are here, now get on with it.”
The group hopes to have exited from its last basement sites in the capital by the end of this year. It has also continued to add to its presence in central London, with a number of significant additions to its estate. Since the turn of the year, the company has secured new sites for high-profile London openings in Dean Street and at the Blue Fin building. Recently, it secured the Hush brasserie site in St Paul’s from Jamie Barber for an opening later this year, while it is believed to be close to acquiring a unit in Covent Garden.
The proof of Campbell and his team’s work was seen last month, with full year like-for-likes up 13.1%, including a 16.2% rise in its fourth quarter.
In terms of the company’s international franchise operation, Campbell believes it was more “receptive than proactive” but that has changed since the appointment of Brian Johnston as international managing director two years ago. Over the past few months, the company has signed a franchise and development agreement to open a “notable number” of restaurants in France, with the first two set to open before the end of next April.
The group, which currently operates 35 restaurants internationally, signed a multi-restaurant agreement with Cases Loisirs-owned company W Restaurants France to launch in the country, with a first site contracted to open before the end of the year in Paris and another in the first quarter of next year. The contract stipulates that the first two years will be focused on opening sites in the greater Paris area before the brand looks at expanding into other cities.
All quiet on the IPO front
The company will also make its debut in Madrid early next year, with more outlets across Spain and also Portugal to follow, after agreeing a multi-restaurant franchise deal with Grupo Vips, one of Spain’s leading multi-brand restaurant and retail groups, which has already had huge success bringing brands such as Starbucks and TGI Friday’s to the region. At the same time, it is set to open its first site in Saudi Arabia later this summer, with a further two openings in the country in the pipeline.
Talk of a possible IPO on the back of the appointment last year of Co-operative chairman Allan Leighton has gone quiet but Duke Street is undoubtedly in a strong position to test the waters for appetite in the business as the year ends and 2017 begins, especially if UK trading remains at its current level and its New York launch is a success. The launch of the group’s own loyalty app is also imminent.
On Leighton’s impact, Campbell says: “His thing is about being single-minded about what we do, what we are focused on. Before he came along we were looking at all kinds of things, complementary brands; where we should go geographically; should it be company-owned or franchise.
“If we IPO, it would be against my will. The UK restaurant public market is not a good place to be at present. The thing we found since doing the bond at the start of the year is that it has put us even more on people’s radar in terms of private equity. Since we did the bond, the company is refinanced and in good shape, the problem we have is finding good locations. We have the ability to do 30 to 40 new sites tomorrow if we could find the sites, we wouldn’t do that because it wouldn’t be the right thing to do, but we have that capability.”
Not that Campbell will allow his team to take their eye off the ball, a point underlined by his choice of location for the group’s head office – Wardour Street, Soho. He says: “We could have moved out to the sticks, but I wanted the team to be in the thick of the action, so that every time they leave the front door they can see the competition we are up against, the new openings and concepts. Every other week there is someone opening and closing here.”
