Born in New Guinea to Welsh parents and brought up in Scotland, Morgan Davies now lives in Manchester and runs Barburrito, a pioneering Mexican fast casual dining chain.
Perhaps his cosmopolitan background influenced the nature of the first business Davies set up, a Manchester takeaway called Globe Delivery that sold food based on the cuisine of five different countries. The main driver, however, was a desire to be his own boss. This was instilled in him by his father, originally a volcanologist (hence New Guinea with his wife, a seismologist) who went on to become a director in various small businesses, working hard for other people – something he taught his son to strive not to do. It had an impact from an early age.
“At school I set up a tuck shop selling black market sweets to the other kids, and a friend and I used to do up old bikes and sell them,” Davies recalls.
He was quite young, too, when he discovered he liked working in a customer-facing role, through a summer job at home from Strathclyde University in a newsagents’ at Edinburgh Airport.
Davies’ business and marketing studies initially led him into management consultancy. His time at the then Andersen Consulting took him around Europe and America and also exposed him, as a consumer, to a good cross section of the eating out market. It was during this time that he also met his future business partner, Paul Kilpatrick and they recognised that their complementary skills (Kilpatrick’s experience lay in procurement and supply chain management) would put them on a good footing to open a restaurant business together. Davies took six months out to research the industry, including three months in Colorado, turning up unannounced to interview restaurant managers about the nitty gritty of the trade.
The end result was Globe Delivery. The idea was great – delivering a choice of takeaway cuisines plus alcohol and even ice cream all from one shop. Customers loved it; industry watchers likened the professionalism of the operation to a chain business; The Guardian named it Manchester’s best takeaway, and Davies says it outperformed all the local Domino’s pizza outlets. But the pair soon realised it was not scaleable.
“Paul and I designed it from a customer perspective, not a business perspective. I remember we kept saying we couldn’t understand why no-one else had done it, but we found out why,” Davies says. “We had far too much stock, there were far too many processes and we had five different types of chefs.”
One of the five cuisines they offered was Mexican and Davies says, therefore, in 2003 they effectively had the UK’s first burrito bar, albeit back of house. For a time they were undecided whether their next venture should focus solely on Thai food or Mexican but Davies’ personal taste preference swung it in favour of the latter.
A few personal guarantees, loans from family and bit of bank borrowing got them the £250,000 to open the first Barburrito, which Davies says was the UK’s first true standalone burrito bar, in Manchester Piccadilly.
Like any new restaurant, it was hard graft, but Davies and Kilpatrick had the added pressure of running Globe at the same time for a while. He says he felt like Mr Ben, the fancy dress shop-loving 70s cartoon character: “There was a brief period when my friends laughed at me as they would see me in a suit in the morning and then a delivery uniform in the evening and sometimes even in a chef’s outfit.”
When the pair were seeking funds for their second Barburrito, offers from angel investors were on the proviso that they got out of Globe, which they did, selling it at around 3.5 times ebitda. The Rapid Realisation Fund then stepped in to help the brand grow to six sites.
That scale was already way beyond Davies’ original expectations for the original concept. Now he can’t quite believe Barburrito has grown to 12 sites and has the backing in place from the Business Growth Fund (BGF) to expand to 19 within 18 months to two years (The Metro Centre in Gateshead is the only site he is in a position to discuss at the moment). In fact he is working on building a pipeline ahead of the current objectives and is in discussions with BGF to secure funds to grow to 25 sites and says he has “no issues with Barburrito becoming a 50-site business” in terms of how prepared it is for expansion.
He does not directly answer the question of whether he is in possible merger or acquisition discussions with any other existing burrito operators, saying: “We are always looking at options but there is nothing on the table that is close to being announced.”
“My original vision was to have two or three in Manchester and to play golf and go fly-fishing every weekend,” he laughs. “I never thought I would go up such a steep learning curve to become the ceo of a nationally-growing chain.”
Having said that, Davies has always had confidence in the quality of the operation and absolutely loves what he is doing right now, especially as he has a strong senior management team in place leaving him to concentrate on strategy.
Kilpatrick went his own way, perfectly amicably, early last year and Davies is swift to acknowledge his impact on the business, particularly in ensuring it was set up very from the word go with systems and processes normally associated with much larger chains. He believes this has played a big part in its success, (the group is currently turning over circa £9.5m a year - about £15,000 per site per week, based on average spend per head of £7-£8 including drinks). The company has always been careful with rental agreements and the fact that it established a foothold in the North of the country before heading South has put it in a stronger position to negotiate, not only as the leader in the UK burrito market but at a time when the sub-sector is more widely recognised and understood by both landlords and consumers.
The other key to the business’ performance, Davies says, is its continual investment and desire to do things better.
The most recent opening earlier this summer of the first Barburrito in Wales at St David’s shopping centre in Cardiff, was the launch pad for a new look for the chain. The feel is more sophisticated and modern and still steers away from Mexican clichés while having a humorous nod towards the fact that it is a western interpretation of a burrito bar. The bags the tortilla chips are served in, for instance, have El Chip written on the front in large red letters.
The Liverpool restaurant has already been given the new design treatment and one of the two Leeds restaurants was due to reopen with it this month after being closed for a week for the overhaul. Davies says between £40,000 and £150,000 per unit will be spent on implementing the look as each restaurant comes up for refurbishment every three to five years. The capex for new restaurants is around £400,000 but the format is flexible and can fit units from 200,000 to 300,000 square feet. Full-service restaurants can have 60-plus covers while other units are 100% takeaway. On average, takeaway sales currently make up between 10 and 15% of turnover and Davies says the portability of the product makes that side of the business ideal for further development.
The firm is a few months into a home delivery trial from a handful of sites with Deliveroo, the web-based third party food delivery service, and is considering extending this, among a number of initiatives to improve takeaway sales including catering to offices. Evening trade and drinks sales are other areas of the business that have not yet reached their full potential, Davies says.
The broader prospects for the UK burrito market, with the easy-to-eat product’s naturally healthy options, low price point and growing profile, are all good enough reasons to suspect Davies’ ambitions for his brand are totally achievable. His clear vision and constant drive to build upon his already market-leading product are the guacamole on the tortilla.
