Whilst 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.
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 has spent less than a year in the job, following a similar short stint as chief executive of PizzaExpress, before returning in McDonald’s and in time 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 brands DNA/values, but also rejuvenated and evolved his management team; rebooted its international expansion plans, particularly its US growth strategy; and refreshed its UK portfolio.
As Campbell put it to me on recent visit to the group’s new head offices in central Soho: “we were running, but not hard enough, or in the right directions”. 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 “The way of noodle”, the book Yau claims not to have written but 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 that someone had written the plan for me! I think it was also probably too focused in the kitchens and not focused in the front of the restaurant and telling people about what it did.”
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.”
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 last 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: “I don’t think we’ll get to the scale of Pizza Express or Nandos, 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.” I understand that the group hopes to have exited from its last basement sites in the capital by the end of this year and hopes to follow new openings in Bankside and Dean Street, with further flagship units in St Paul’s and Covent Garden.
The proof of Campbell and his team’s work was seen this morning, with full year like-for-likes up 13.1%, including a 16.2% rise in its fourth quarter. Talk of a possible IPO on the back of the appointment last year of Co-Operative chairman Allan Leighton has gone quiet for now but Duke Street is undoubtedly 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.
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.” Wagamama’s new head office is right in the thick of the eating-out action but as a business it is increasingly standing out from the rest of the sector.
