Jones goes back to the coalface

Speaking back in 2002 as chief executive of pub company Spirit Group, Karen Jones said that the biggest thrill in business was “walking into one of your pubs and seeing it packed full of people having a fantastic time”. You would think that after a undergoing a recent Company Voluntary Agreement (CVA), it make take some time before she will be able to say the same about her new charge Prezzo.

With US private equity firm Carlyle Group currently positioning itself to possibly wrest control of Prezzo, as the troubled restaurant chain negotiates with creditors to secure some breathing room on its debt covenants, you wonder how much time she will get. Prezzo is expected to return to creditors with a plan to restructure its £154 debt package in due course, which would give US private equity giant Carlyle an opportunity to swoop for control of the business through a debt-for-equity swap. It currently owns £43m of the company’s loans.

In the meantime, TPG Capital, which acquired the then 245-strong Prezzo for £304m back at the start of 2015, will hope Jones will prove effective in steering the business through continued choppy waters and push through the initiatives that outgoing chief executive Jon Hendry-Pickup has put in place, which are already showing signs of working.

Jones knows the industry inside and out and has previously made TPG, or Texas Pacific Group, as they were know in the Spirt/Punch days, a significant amount of money.

The co-founder of Café Rouge, which she turned into a national chain and sold to Whitbread in 1996, Jones joined Punch in 1999, turning around its managed Spirit Group estate and overseeing its demerger three years later and then its sale back to Punch in a £2.7bn deal at the start of 2006. During that time, she picked up the moniker “pub superwoman”. She was also at the same time, a non-executive director of the then recently floated Gondola Holdings, which owned PizzaExpress and ASK restaurant chains.

Within six months of leaving Punch, she launched food-led pub operation Food & Fuel with her other Café Rouge co-founder Roger Myers. The new business was launched though the acquisition of five sites from Punch and now stands at 12 pubs. Unsurprisingly, Jones has been in demand as a non-executive and was previously on the board of Corbin & King and currently sits on the boards of Hawksmoor and Mowgli as their non-executive chairman, with both these respective companies facing their own different challenges at present.

Has she missed being in the trenches? The press announcement of her appointment at Prezzo, certainly puts her front and centre. As it states, she will take “full responsibility for the Prezzo brand, its strategic direction and the execution of the transformation plan alongside Prezzo’s existing leadership team”. However, it is thought that at one stage Jones was to come on-board as non-executive chairman, the “non” part only being dropped after it was clear Hendry-Pickup was departing.

It is thought that after steering Prezzo through the CVA, which involved 94 restaurant closures, Hendry-Pickup, thought that it was a good time to go. Many would argue that Hendry-Pickup has made the best out of what has been described as an impossible job.

As he said post CVA: “The core of this business is in really decent shape but there are certain sites, including those in the subsidiary brands, that are just not working out. I would love to take the time necessary to get those sites back to where they need to be, but the market isn’t giving me that time.” He has put a Transformation Plan in place, which has four key pillars focussed on making the brand distinctive; refreshing the estate; step-changing the food and drink and improving its people culture. The initial signs form 12 refreshed sites is that this plans has gained some transaction.

Talking to a number of people about the situation at Prezzo over the last 18 months it is clear that many within the sector have been impressed with him, and I would not be surprised if he turned up somewhere else in the sector sooner rather than later.

He leaves an experienced team, led by chief financial officer Wayne Arthur (ex-Premier Inn); operations director Paul Barton (ex-PizzaExpress); and most recently appointed chief commercial officer Darrell Wade( formerly of TGI Fridays UK). They will find Jones to be people-oriented and extremely driven.

There is currently speculation in the market that a search is being carried out for a new chief executive of a c£200m-plus business, which Prezzo remains. With TPG’s continued ownership of Prezzo becoming uncertain, Jones’s appointment looks like a short-term measure to steer the business through this uncertainty, with a new chief executive to be brought in and Jones to then revert to a non-executive chairman role. If that is the case, names such as Jim Slater, the former Costa Retail managing director and current managing director of Chipotle Europe; and ex-Café Rouge and La Tasca managing director Simon Wilkinson may come into the frame.

Speaking at the Imbiba Conference last year, Jones set out the five points she finds herself constantly repeating to the hospitality entrepreneurs she has supported. The first is clarity of concept – she says: “I’ve always maintained that if you can’t sum up your business in a sentence then you’re not clear about what you’re doing. If you’re not clear then there’s no reason why you’re customers should be clear.”

In a market where the Italian casual dining brands are being impacted the hardest, this may be her biggest challenge. As brand consultant Ian Dunstall said in last month’s MCA when discussing rescuing a brand from adversity: “Prezzo is the most challenging brand. What does it stand for that is differentiated? It sells tasty Italian pizza in a relatively stylish environment – but how does that make it distinctive? I have nothing negative to say of the offer but does it have a strong positioning differential that creates a reason to return? Without it, I understand why Prezzo relies on one of the highest discount redemptions in the industry to drive weekly traffic. It also endorses why the management team has declared a ‘Transformation Plan’ for a new look and feel for the business.”

Over her whole career, Jones has not shied away from hard work, indeed it is something she relishes. “It’s an incredibly interesting challenge building something up and getting people to understand the whole process,” she said during her time at Spirit. “We spent the first two years at Punch Retail getting the business sorted out. The first thing we had to do was work out what we had.” At that time, she had 1,040 pubs and a lot of those were unloved and underinvested. But they were in great locations and she could see what they could become. Divide the number of sites by five and that is roughly where she finds herself with Prezzo.

At that time, Jones appreciated the luxury of having backers such as TPG, who let her get on with the task. She certainly has their backing this time, I just wonder if she has the time.