London healthy food chain Abokado is on course to exceed 30 stores this year and it is unlikely to stop there given its aspirations to expand nationally. Co-founder and director, Mark Lilley, was recently featured in BDO’s Restaurants and Bars Report, where he provided a candid overview of the challenges that come with growing a multi-site operation from scratch. Here, with the kind permission of BDO, is his story.
“‘If it was easy everyone would be doing this’. That’s what I regularly tell myself when a project comes to nothing, we lose a key member of our team, a new store doesn’t perform quite as expected or if I’m just having a difficult day. I remind myself that this isn’t meant to be easy, otherwise everyone would be doing it.
“I set up Abokado in 2004 with my wife and what an adventure it has been. We now have 22 stores and will be up around 30 by the end of 2015. We’re eyeing national and at some point international expansion. People ask me if it’s got harder or easier over the years. Neither. The challenges are just different. There are always new projects, fresh ideas, initiatives to be explored, problems to be tackled. Ways to simply make our business better.
‘Broadening of the market’
“I chose to start a restaurant group in the healthy food sector as a response to the way in which I saw my own lifestyle changing. I’d left my job in the City where I’d put on quite a bit of weight and my wife and I were on an extended honeymoon in Australia. We were inspired by the wonderful takeaway sushi, juice and noodle bars in Sydney to bring the same fresh and healthy food philosophy back to London.
“In 2004 London was still a drab landscape of mayonnaise-filled sandwich bars. How things have changed! More by luck than judgement, we opened at just the right time and have been able to grow our business over the past 10 years as demand for healthy food has exploded.
“I’m certain that what’s driven that growth is simply better availability of affordable and delicious healthy food. For the first time, in central London at least, healthy food is now truly accessible to everyone and all pockets. We found at the start that our customers were early adopters, the young and adventurous who were happy to try our Shwraps, spicy rice hot pots or noodle salads.
The London property market is over-heated. Our diligence process for new stores is now more rigorous than it’s ever been”
“We’re now seeing a broadening of our market into an older age group and a wider economic demographic. For more and more people, a healthy breakfast or lunch choice is now the default option and we see a very high frequency of visits from our loyal customer base, a large proportion of whom will visit many times during each working week.
“That tells me that this is enormously scalable and that we have the potential to achieve very high store densities. We already have stores sitting within 250 metres of each other. London has been where we and our competitors have been carefully fine-tuning our concepts over the past few years and we’re now beginning to eye the rest of the country and even international markets where the healthy food offer is non-existent, poor quality or dreadful value.
“We visit these places and the people look the same. Why wouldn’t they find our offer of genuinely healthy, freshly-made and affordable food compelling? Demand for healthy, freshly-made food is here to stay and this market will grow and grow.
‘Flexible store model’
“I won’t bore everyone with yet another rant about how the London property market is overheated and how difficult it is to get sites. I agree and it’s about the worst I’ve ever seen. We’re fortunate to have a very flexible store model which means we’ve been able to continue building our pipeline through this period. Seven stores last year, another seven this year.
“But property will continue to remain challenging and actually the greatest challenge for everyone will be not overpaying. We’re fortunate that we have sensible and pragmatic private equity investors in Kings Park Capital, who trust us to develop our pipeline in a cautious and considered fashion and don’t put pressure on us to grow faster than we’re able to.
“I have friends in this sector who are not as fortunate and it’s inevitable that they’ll take sites on terms at which it’s impossible to make an acceptable return. Our diligence process for new stores is now more rigorous than it’s ever been. And while I’d dearly like to say that every one of our sites is a runaway success (they’re not!), we’re achieving record performances in our new store openings. Our concept needs A1 premises and I honestly don’t know how we’d be able to grow our business if we were restricted to A3.
“We’re also able to operate from sites ranging from 350 sq ft to 1500 sq ft front of house, which means we can take advantage of opportunities a lot of the market shies away from.
‘Brave new world’
“Abokado operates in a very competitive environment, in common with most of the hospitality sector. Though the healthy food to go sector is growing rapidly, competition is getting fierce as we and the rest of the market scale up and open more stores. A lot of us were operating in a bit of a vacuum until about two years ago.
“Then we started encroaching on each others’ territory and have now entered a brave new world where we’re fighting for the same customers. There’s already over supply in some parts of the West End and City and some operators are hurting. There will be winners and losers for sure.
What really gets me fired up is beating the competition”
“But no one should reach for their violins. I love competition and suspect that most of us do. I’ve realised that what actually drives me is winning. Don’t get me wrong, I love what we’ve created and am incredibly proud of all the positive ways in which we influence people’s lives, whether by helping our customers to lead healthier lifestyles or by giving our many international employees a memorable first year in London.
“But what really gets me fired up is beating the competition and that’s what drives my constant and uncompromising pursuit of excellence. I love it when I know we’ve cracked something that will give us an edge on the market.
“It drives me crazy when we see that we’ve missed a trick or we know in ourselves that we’re weak in some or other area. Ultimately we’re focused on creating a world class business.
View the full Restaurants and Bars Report at the following link: www.bdo.co.uk/sectors/leisure-and-hospitality
Stores: 30 (by end of 2015)
Cuisine: Freshly made and healthy food, served fast
Focus: London, but plans to expand nationally