Businesses that have proven themselves internationally but localise sufficiently in each market are deemed lower risk for investors, according to Capdesia managing director Ashton Crosby.

Crosby was speaking during a panel session hosted by MCA contributing editor and Peach 20/20 founder Peter Martin at the Peach 20/20 Leaders Summit, held at The Roundhouse in London last week.

The Funding for Growth panel also featured Nightcap’s Sarah Willingham, White Rabbit Projects’ Chris Miller, and Rod McKie of New World Trading Company (NWTC) and Megan’s.

Ashton Crosby, MD, Capdesia

Crosby referred to his experience bringing Marugame Udon to the UK as well as the acquisition of Fulham Shore earlier this year, with a view to take Franco Manca international.

“If you’ve proven it internationally, there’s less risk,” Crosby said. “A good example is Hawksmoor in the US.

“There are a lot of reasons to invest not to invest in the UK right now, more than there are to invest…but we’re still optimistic about investing in the sector over the long term.”

Despite the economic backdrop, he pointed out that valuations are now “more sensible than during the days of cheap money and fast rollouts,” with seasoned investors spending more time on UK markets.

“On the flip side, there are some who don’t see the risk-reward,” he added. “You have to invest ahead of the curve.

“Marugame Udon has proven itself internationally but we made a significant investment in opening the first unit. Now it’s about getting more people to try udon…it’s about investing in educating the market and changing people’s habits.”

Capdesia’s strategy is to focus on unit economics and a strong ROI, combined with consumer touchpoints and omnichannel and multiformat expansion.

He reiterated that the British consumer has proven resilient as the sector evolves towards formats such as drive-thrus.

“Our long term view is that the sector isn’t going anywhere, it’s just going to evolve.”

Chris Miller, CEO, White Rabbit Projects

Chris Miller added that White Rabbit has a track record of successful international expansion in its Lina Stores and Island Poke concepts, which were key in attracting investment.

“One of [investor] McWin’s reasons was our ability to successfully open in multiple territories,” he said. “It’s not easy anymore to get to 100-200 sites in the UK and then go international.

“We looked at a smaller number in London and the UK, then at France, Germany, and Japan. The size of the prize gets bigger than when the concept is saturated in the UK.”

Miller underscored the importance of getting the site economics and EBITDA in place before accelerating expansion, as well as the benefits of an omnichannel approach.

“With Lina Stores, we have multiple revenue streams from a single entity.

While acknowledging private equity has “taken a step back” from the industry, Miller took a similarly optimistic view over the long term.

“We’ll see a lot of shakeouts. It’s definitely tough out there…but with chaos comes lots of opportunity.”

Sarah Willingham, CEO, Nightcap

Adding to Crosby’s and Miller’s insights, Sarah Willingham said that while attracting new investment is difficult, it is the seasoned investors who stick with the market in the long term.

“[Nightcap has] done four acquisitions in two years,” she said. “Even as a plc, we still need relationships outside the existing investor cohort. That really served us for the Dirty Martini acquisition.”

While conceding the late night sector has been challenged post-pandemic, she emphasised that the ROI on individual businesses is more important.

Nightcap has currently paused expansion, but fast growth in its early days gave it the “critical mass to hire good people.”

“Nightcap is still more palatable or investible because of its business model,” Willingham added. “We bought good businesses with really good underlying models.

“They’re performing in line with the market and for now, it’s about synergies and embedding, and making sure our four businesses work well together.”

Rod McKie, executive chairman, NWTC, and non-exec, Megan’s

McKie spoke of the evolution of the food to go and convenience market.

“EVs are playing beautifully into MSAs,” he said. “It’s a necessity-driven need. You’ve got the footfall and a captive market.”

For NWTC, the focus is on like-for-like growth rather than accelerating expansion, similar to Nightcap.

“I’m a firm believer that it’s all about EBITDA and cash is king.

“The landscape has changed dramatically…but you’ve still got to be good at the basics and be nimble.”