Former Yum! Brands and Starbucks man Mark Fox took over as CEO of Bill’s Restaurants last year. At the recent Casual Dining Show, he answered questions on where the 80-unit chain is headed under his leadership and shared details of plans to invest in its kitchen estate.
What are the key threats facing you in 2017?
I think the key threats are what everybody else is facing, so we clearly have a significant wave of cost pressures that are already hitting thanks to exchange rates post-referendum. And then you’ve got business rates, National Living Wage increases and just underlying inflation, which is clearly something we haven’t really seen for some time but it is now coming back. That underlying cost pressure is definitely one threat to us. I think the constant threat, which is for all of us, is the battle for talent. So notwithstanding opening restaurants, finding talent would be our second big challenge.
What about the key opportunities?
We have one big opportunity, which is that as a business I don’t think we have told our story as well as we should. We have real heritage. Bill [Collison, founder of the company] is still in the business. He designs every single one of our restaurants today. He is actively involved; still a shareholder. And I think that is a huge opportunity for us because as people search out experiences, particularly the millennial generation, authenticity and real things are what people are after, and I think we have that in spades. We have kind of been too busy opening restaurants to really celebrate where we have come from, so the opportunity is a simple one.
We are in a real sweet spot where we have 76 restaurants today; we are on site in another one now and we are due to go on site at another, and we have got a pipeline of growth. That’s a huge opportunity for us, particularly in the current environment where we see other businesses in a different phase of their evolution offloading sites. That is great for us because it means more fun.
With almost 80 restaurants, how do you decide how to trial a new product and ensure you can roll it out across efficiently?
I think there are two parts to this, really: how did we and how will we? Historically, we were too busy opening restaurants to worry about that so new stuff went everywhere immediately without really testing. Luckily that worked really well for a long period of time. I think as the markets become tougher and you have to think more carefully and be much more precise, we are going to have a group of test restaurants where we run through new products on a specials menu initially and then, provided they make sense on the specials menu and prove popular, we will push them out to the entire system in the next menu release. We’ll have a staged approach through a group of test restaurants on a specials menu. That means we can then manage the logistics of de-listing and then re-listing and making sure we have enough timeline for the purchasing to be done.
What is the key to finding the right location?
I think it very much depends on what you’re business does, what it is, what it stands for and what occasion it caters for. For us, increasingly, it is about just being where people are. So historically if you look at the bulk of the Bill’s estate, it is located in high streets, typically towards the end of the retail, where the restaurant section begins, so straddling retail and leisure. But we are going into many more leisure-oriented areas and many more roadside locations, where we know there is just a mass of people. Because if you’ve got a great offering and there’s a load of people, and they are there around a meal time, I think for me that kind of gives you a damn good chance. I think location is very brand-specific and offer-specific, but for us it is just about being where the people are and that is changing. People aren’t on the high street like they used to be, so we are now going to where they are in order to offer them what we have, which we hope they want.
What your views are on Deliveroo, and how you are evolving to keep up with them and not lose customers entirely to them?
This is probably going to be a bit controversial with my restaurant colleagues but I think Deliveroo is a good thing. I don’t like having to pay lots of money to Deliveroo to deliver my product to people, clearly, but I’ve come from a delivery business — I used to run the Pizza Hut delivery business — so I know much it costs to deliver an item. To be fair, what Deliveroo charges is not far off what it costs to deliver an item, so I think at that level delivery is a good thing. Why? It gets my product to guests who can’t come to me. I perhaps feel a little bit different about it to some restaurateurs because I actually think people want to come to Bill’s because it’s about more than just the food.
The food is important, don’t get me wrong, we spend a lot of time on it, we have hired in the best people we can find in food and we spend a lot of time deliberating over what food we do and how we do it. But it is also about the environment, too. Our restaurants are lovely places to be and that can’t be replicated in delivery. I suspect delivery will remain a relatively small part of our business and therefore largely incremental, so I am kind of okay with it. I think if you’re a restaurant business that is catering more for that ‘can’t be bothered to cook’ occasion, rather than a treat occasion, and you’re mixing at 15% of your sales on Deliveroo, then I think it probably feels very different.
Bill’s carries out review of kitchen estate
Bill’s is carrying out a review of its kitchen estate to make sure that its sites are equipped to cope with its future growth plans. The company, which serves a comprehensive breakfast, lunch and dinner menu, is examining its catering set-up across the 76 restaurants that it now operates around the country.
“It is an exercise we are undergoing right now — to re-evaluate our kitchens, understand the platfoms we have and make sure the proposition is right for what we want to deliver in the future. It is clearly important to us,” CEO Mark Fox told FEJ.
Although it has been trading for more than 30 years, Bill’s really exploded into life as a restaurant business in the early 2000s. Its strongest period of growth came between 2011 and 2014 when it went from 20 restaurants to 60.
The company’s financial accounts for the year to July 2016 show that it opened nine restaurants during the period as sales rocketed 20% year-on-year to £110.5m. Adjusted EBITDA before pre-opening and exceptional costs, meanwhile, increased 9% to £13.5m.