Co-founder Victor Lugger tells MCA’s Restaurant Conference what the €270m McWin deal allows the Italian restaurant group to achieve, his “borderline panic” at opening in Milan, and how he still doesn’t spend a dime in marketing, preferring to let organic social media create buzz
Big Mamma Group investor McWin provides the Italian restaurant group with a “strong anchor player”, which will enable it to take on debt financing and expand to the next level.
Big Mamma co-founder and co-CEO Victor Lugger said he felt “incredibly blessed” to have secured the deal, which valued the French-founded restaurant group at €270m (£236m).
Yet despite its success in the UK and wider Europe, he says there was limited interest from investors in the business, due to sluggish demand for the restaurant sector among private equity funds.
Speaking at MCA’s Restaurant Conference, he described how the investment in September replaced a seed round used to launch the group.
“When we started Big Mamma 10 years ago, we were incredibly lucky to have access to equity capital investment,” he said, in conversation with Restaurant Online editor Stefan Chomka. “We were two 28-year-old kids looking to open restaurants and the only people who believed in us were entrepreneurs. All of them put in what was for them very little money but which raised £1.5m.
“We had 17 investors and 10 years down the road we said that if we want to keep growing without diluting our offer then we need debt – and no one would lend to us without a big strong anchor player, so we started to look to replace 17 investors with one big one, which was McWin. We were incredibly blessed to be able to do that deal.”
Describing a lowkey investment climate, he continued: “There was way less interest than I expected. I have received emails from every day for 10 years from private equity firms across the globe, from the US to Dubail, saying let’s have a breakfast or lunch and build a relationship.
“Six months ago, we said we were looking for something and 90% of them did not even ask for the data. It’s restaurants in 2023 and they are not touching it. I had been told this would happen. So, we had less people on the start line, but we got lucky and had at least two on the finish line – in fact we had three. That helped us have a proper deal that was very satisfactory for everyone.
“Humbly, the company is doing really well, it was not a distressed deal, we didn’t have to raise the money.
“Having too much [interest] is never bad. I wish I’d had more.”
Building a brand
Lugger said there was “infinite white space to grow”, with a range of offerings and price points established across Big Mamma’s locations.
“Before we launched the deal, we asked ourselves what’s ahead for the next 10 years? We’ve expanded the range of restaurants we do so we have an average spend of £27 to almost £60 in some restaurants, which allow us to do more diverse restaurants in more locations, whether that be Berkeley Square, Canary Wharf, Berlin, Hamburg, the US or Dubai. We hope we can double what we’ve done in Europe where we have 23 restaurants in four countries. That’s still very little penetration – we have infinite white space in which to grow. We have five restaurants in London and we can double that and still be very small.”
Part of the appeal in McWin are the founding partners’ restaurant background, and appreciation that a popular product requires patient investment.
“The best thing my private equity partner can give me is money and trust. McWin’s co-founders have been doing restaurants for 30 years, they understand the importance of investing in people, food and brand over a very long period of time. They understand if you create value for guests now it will pay in five or 10 years. “Should they have to sell they will capture way more value if our brand delivers quality because that will increase the multiple at which they sell by three or four and create more value for them than creating EBITDA by 0.5% and selling cheap mozzarella.”
Lugger discussed the forthcoming opening in Milan, which will be the second Gloria for the group, as it starts to build multisite brands under its portfolio.
“We will have second Gloria in Milan. Gloria will exist as a brand not just a name, and we have a Circolo in Paris and London so that is also a brand, and then everything else will be new with different restaurants. We want to have the capacity to always innovate, for two reasons. First, it’s fun and motivating for the team to open something fully new because it fuels the passion and lowers staff turnover. Second, being able to adjust every time is the number one success factor that has enabled us to be successful in four countries. I didn’t have to come to London five years ago and copy and paste what was cool in Paris seven years ago.”
Opening in Milan
Meanwhile, the France-founded group’s forthcoming opening in Milan was described by Q&A host Chomka as like “selling coals to Newcastle”.
Commenting on the challenges of opening an Italian-inspired restaurant in Italy’s second city, Lugger said: “We are incredibly nervous - borderline panicked. We have taken everything from scratch and asked ourselves why is it that people in Milan will want to come to our restaurant? Is it because the mozzarella sourced direct from Italy? No. Is it because it is good value for money? There are lots of places in Italy that are.
“Hopefully, our service style is pretty innovative for Milan and there is nothing like the vibe we do – we keep the fundamentals really strong and be best in class in what other people don’t do in Milan. If you’re good, cheap, serve food with a smile in a nice place it will work for any restaurant anywhere in the world.”
Expanding in the UK
Alongside international expansion, Big Mamma will look at UK growth as well, with sites outside London under consideration.
“Manchester is a very easy second city. There are many cities that all have their advantages and challenges. I’ve always thought it’s better to have a good team and a good spot in an average city than a shitty spot in a good city.”
Despite its huge popularity and buzz among diners, Lugger added that the business invests little in marketing spend, and tends to allow customers to do that job organically via social media.
“I don’t spend a dime on marketing. We only have four people in marketing, and they are all junior. I spend a lot on design - not so that people will go on Instagram but if you create a good product people will talk about it. And it happens that people talk about us on TikTok and Instagram. If you build beautiful restaurants people have the platforms to talk about it.”
