Food for thought from the experts

Nov 14 2007 by Iain Laing, The Journal

ENTREPRENEURS of all ages always say to me it is other people in business they gather really valuable advice from, and so in the first of a new series called ‘Head to Head’ we invite two entrepreneurs to come up with a wish-list of questions they’d really like answered about each other and their companies.

As you will see as the series progresses, it is not just the new kids on the block that benefit from coming together with more established business people, but often the two-way process of picking each others’ brains also helps those who have been running their own companies for many years see the local business scene through the eyes of someone just emerging and facing new challenges.

Acclaimed restaurateur Terry Laybourne talks with Peter Hunt, joint managing director of up and coming catering business Fresh Element.

Terry Laybourne, MBE, has placed North-East England firmly on the culinary map.

A passionate advocate of good quality, local food, Terry worked across Europe before returning to his native North-East to build a series of high profile, award-winning restaurants including Fisherman’s Lodge, 21 Queen Street, Bistro and Brasserie 21 restaurants and the new Cafe Vivo at the Live Theatre site on Newcastle’s Quayside.

Peter Hunt, 25, is the co-founder of Fresh Element, a gourmet outside catering company that evolved from an original concept to sell ready meals of organic local fresh produce that people could easily cook at home.

Now Fresh Element caters using a menu of locally sourced produce at events, weddings, parties and conferences around the North-East.

Terry asks Peter

TERRY: I was surprised when I looked at your website to see how the business had developed. I’d assumed Fresh Element was still a quality ready meal company rather than a bespoke catering firm.

PETER: Three years ago we started as a niche business focused on the domestic market for fresh, top quality ready-to-cook meals. Our biggest learning curve in the first six months was the operating costs.

We were scared we would end up becoming a factory machine churning out ready meals (which was the opposite of our aims) to scale the business up, so we knew we needed to move away from that model if we were to grow.

We were increasingly being asked to cater for parties and the big demand for these prompted us to have a crack at it, so by switching direction we grew by between 25%-50% without doing any marketing. Wastage was very high on pre-ready meals but catering meant no wastage as we were buying to order. We still offer our meal kits today, but on a pre-order, bespoke basis for occasions such as Valentine’s Day and Christmas lunch. Nine to 12 months into the business we decided to do the obvious thing and follow where customer demand was leading us.

TERRY: What made you believe the ready meals business was strong enough to hang your hat – and your new business – on?

PETER: I met my business partner, Andy Ross at Newcastle University, where we were both doing IT degrees and we did an enterprise module that saw us having to write our very first business plan. I had previously spent time on a placement at Unilever, which had a venture capital division that invested in young businesses.

I had seen how they had invested in a start up called Rocket London – which operated food kiosks, with frequently changing menus, at tube stations.

While I was there, the business expanded from four stations to over 20. Rocket London was partnered with dinner party specialists Leaping Salmon, and although the business was taking off in London and the market research results were great, it actually folded a few years later.

However, at the time it had inspired me; I knew the concept of marketing great-tasting convenience food with soul and character, hand- made from local produce, was sound and our original business plan was closely based on the Rocket London model, although we thought we could market it through North-East Metro station outlets.

Andy and I actually went on and established the business within 13 months of leaving university. We thought if we didn’t do it straight away, while we had few commitments, we might never get another chance.

We knocked the Metro station kiosks idea on the head though, and went back to Newcastle University, The Prince’s Trust and Project North East for support and funding.

Apart from my Unilever experience we knew nothing about business or the food industry.

We were lucky to attract chef Richard Simso so we always had the food side covered, which meant we never compromised on that front. Through The Bridge Club we have two non-executive directors – Caroline Theobald and Ian Brown.

TERRY: What do your non-executive directors bring to the party?

PETER: Lots of things, it’s hard to quantify. Caroline has extensive contacts and in-depth knowledge of the North-East business community. Ian Brown has a business park in Northumberland and knows about rural community. It’s helpful to get an outsiders’ viewpoint and use them as a sounding board, not so much on the day to day stuff, but on strategy issues.

TERRY: How do you use their expertise?

PETER: We hold board meetings every two to three months, and between them we can just pick up the phone or email any of them for advice. It also gets our name out into the business community, which is good for PR and marketing purposes.

It gives us access to finance sources we might not otherwise be aware of, and of course as a young team, having a support network of senior figures is great when we are negotiating with banks and funders.

TERRY: Have you ever flirted with the idea of a restaurant?

PETER: Not really, there is still a lot of growth to be had through our existing business. I’m not sure which is the tougher job – catering or running a restaurant.

The nice thing about a restaurant is that you can control the variables as you own the kitchen, although you are highly dependent on the quality of your staff, and you can’t predict the exact number of covers.

In the catering business we can take forward bookings 12-18 months in advance, which helps with cash flow and drawing down funding from the bank.

The big disadvantage is that we are constantly working at different venues rather than our own kitchen, so have to react to events outside of our control on the day.

I’d rather look at expanding outside of our core region, perhaps through Northumberland and the Scottish borders where there is potentially lots of work.

The size of our kitchen may become a bottleneck though so we might need bigger premises or eventually we could split over two sites.

The first six months of any business is all about survival.

The next 18 months are about experimenting with direction.

After that it’s about building on your strengths and success, and putting robust systems and processes in place, which is where we are now at.

Peter asks Terry

PETER: How has the restaurant business changed since you started out?

TERRY: The whole food industry has grown enormously. Society has changed – it’s less of a luxury to eat out now and customers are more savvy. There was an element of arrogance about restaurant owners back then, but the superior attitude is all gone and things have changed for the better. Great food produce is so much more accessible. I remember in 1978 on a short vacation back from my job in Switzerland I met an old mate in town who was a head chef in Newcastle, and although it was a fish restaurant and only 14 miles from the sea they didn’t buy fresh fish. I was used to cooking at St Moritz which is 1800m above sea level and in a country which is landlocked yet we received fresh fish deliveries twice a week. Nowadays produce is much more readily available, and locally grown North-East food is second to none.

PETER: So is the business more competitive now?

TERRY: The number of restaurants has grown, but so has the market. At the sharper end where they are catering for the masses on low menu prices it is more competitive, and base costs are probably not a great deal different, so that must be hard.

PETER: Do you think of yourself as a chef or do you regard yourself as a businessman?

TERRY: In my heart I’m a chef. I certainly think and behave like a chef when pressured. I suppose in reality I’m a restaurateur, but I don’t think of myself as a businessman. Running restaurants and developing a culture of hospitality in the business is what I do, how well the business performs is a result of how well the restaurant performs. I am continually looking outward in order to drive the business forward, and have an optimistic strategy. For instance if staff costs are too high we try to find more customers, rather than cut staff numbers.

PETER: All things considered, do you think that your joint role as chef and business owner has been more of a help or a hindrance in building your group of businesses? Put simply, do you think the chef should stay in the kitchen?

TERRY: I’ve had the best of both worlds. I started with a core team of four and still have that support network. For the first 18 months I was locked in the kitchen, chained to the stove. My wife Susan and Nick Shottel were the face of the business, while my brother looked after finance and admin.

I had no distractions so could concentrate fully on driving the business forward through excellence in my cooking.

Am I happiest in the kitchen? – yes and no. There was a time I was certainly most happy under pressure in the kitchen. Now it is unusual I actually cook – cooking well demands absolute dedication without distraction, you cannot dip in and out and expect do a great job. I focus more on marketing, and work much more on the growth of the companies and keeping our standards high to try and deliver the best in hospitality. By this I mean developing the best people to deliver the best product in a great environment.

PETER: Was the transition from restaurateur to hotelier a smooth one? What were the most important things you learned?

TERRY: I loved the diversity of the whole hotel project from day one. The design and development phase was great and I relished it. At opening time it was sleeves rolled up as usual, and the old fire returned.

You can plan, but at some point you have to open the doors and see what happens, while staying light on your toes in case you have to move through 180 degrees.

I guess the one big challenge was embracing other areas when running a hotel, and working collectively. Bringing together all the elements such as the restaurant and bedrooms, conference and banqueting.

In isolation those elements are not challenging, but it’s all about bringing everything together at the right time, and in the right way. You must keep lines of communication open and meet a lot.

PETER: What are your future plans for your group of companies?

TERRY: There are a couple of things I still need to do. Caffe Vivo is our latest project and is another departure for us. Based at Live Theatre it will open early in the new year. We are also moving our HQ from Durham to Newcastle so it will be nice to have a home again and not have to work out of my car!

Overall I have no real desire for aggressive growth, I’m very much driven more by success and standards than financial gain. I still have to decide what to do with the old 21 Queen Street site and I also want to continue to inspire and train all my new chefs and bring new talent through the ranks.

Head to Head is run in conjunction with The Entrepreneurs’ Forum – a members-only organisation that brings together business owners at all stages of their journey. It runs a mentoring programme to help people running growth businesses benefit from the wisdom of more established entrepreneurs. For more details go to www.entrepreneursforum.net

Carole Beverley is chief executive of the Entrepreneurs’ Forum:

The first six months of any business is all about survival, the next 18 are all about experimenting