TriSpan’s Robin Rowland and Pho MD Patrick Marrinan spoke to MCA about their Investor of the Year win, why the magic of the brand lies in the founders, and its development journey since the deal

It may have been a long courtship but since TriSpan acquired Pho last summer it’s not wasted any time in putting its strategy into action, with the accelerator pedal fully pressed on pipeline growth.

Its European operating partner, Robin Rowland, had known Pho co-founder Stephen Wall, for about 15 years, since Rowland’s time at YO!. Initial conversations were had around four years ago, but as with many best laid plans, Covid delayed proceedings, with the deal finally done in August 2021.

“They weren’t looking for a process,” he says. “But it was a very strong, solid business, and we were trying to find a solution to what the founders (Stephen and Juliette), the management, and we were looking for, because there were definitely three parties in the marriage.”

Pho’s managing director Patrick Marrinan adds: “From the founders and management’s perspective it wasn’t ever going to be a far and wide auction process where you just take the highest number. Relationship is everything.”

Described by both parties as “a fantastic deal”, the investment was made through the private equity firm’s dedicated restaurant fund Rising Stars – something that was a key selling point of the deal, and what might “lift us above an average investor”, says Rowland.

Conceding that in contrast to other firms, TriSpan is “relatively new to the game”, having set up the fund in 2015, he says it has “worked really hard to invest against high quality assets, with extraordinary management teams”.

“Clearly we have been very selective in what we have done. Everyone in the sector, I think, recognised how good the Pho asset is, and that’s probably what allowed us to get that chance for the award,” he says of its Investor of the Year win at MCA’s Retailers’ Retailer Awards 2022.

220323_rroty_theguildhall-1-TriSpan Award Group Photo

TriSpan has six investment partners – three on each side of the Atlantic – and nothing happens without at least four of the six voting in favour of it, says Rowland. And for a potential acquisition target to cut the mustard it must meet the firm’s strict 12-point criteria.

They must be a proven business – which would normally require them to have reached a scale of at least 10 sites, have a minimum EBITDA of around £2m, a history of success, and a proposition that the consumer really raves about… and obviously something likely to deliver a healthy return on investment, he explains.

‘We don’t suddenly pull gears’

For TriSpan, Pho ticked all these boxes. At 30 sites at the time of its acquisition, the Vietnamese chain already had a nationwide presence, and a strong foothold outside London – something it is looking to build upon in the coming years.

Upon completion of the deal the key thing was “to get to know each other properly at that deep level”, says Marrinan, so there was understanding around the board table about how Pho operates and how the two parties could support each other. Essential groundwork to be done in advance of its ultimate task of building and delivering a strong pipeline of new restaurants.

Developments within the business have been focused on the five ‘p’s’ of product, people, property, profit and promotion. When it comes to the menus, Juliette Wall has always been the driving force, and still is. Both her and her husband Stephen – who Rowland describes as being “the DNA of the business” – remain in executive roles to help support the growth plan for Pho.

“The menu has moved on in the last year – it’s fresher and lighter. But that’s just been organic. We don’t suddenly pull gears. We’d be crazy to tell them what to do on that front,” says Rowland.

Pho 4

Pho has also been working hard to reposition itself as an employer of choice and has been improving pay rates and communication within the business. It is also looking to appoint a new marketing director to replace Libby Andrews – who recently joined Turtle Bay – which is “close to fruition”. Marrinan has also been working with the FD to rationalise and streamline systems within the business to make it more efficient as it grows.

But perhaps the biggest step-change has been in property. Historically Pho was opening two or three sites a year and is now targeting up to seven.

Focus remains on the regions

Since last August, the team have opened five new sites and two dark kitchens, with an opening in York coming up in early September, followed by Borough Market – its first site in the capital in around seven years – and Canary Wharf, alongside “a couple of others that aren’t in the bag yet”, in the north of the UK and the south coast. It most recently opened in early July at Royal William Yard in Plymouth.

“We are in a really good place now, and the sites that have opened have been extraordinarily successful,” Rowland adds.

The business is confident that its brand resonates throughout the UK, with its regional bias something that was “without a doubt a saving grace through that rocky Covid period”, Marrinan explains. “Our regional estate is the biggest side of the business now, and the best performing side… and it will continue to be the bias for us in terms of growth.”

Pho 1

Pho has been trading strongly, with like-for-like sales up 18.5% in the most recent week, Marrinan adds. In addition to trade in central London being slower to return to normal levels than the regions, he says there has been a definite shift to more delivery trade in the capital. That being said, the London villages have been “phenomenally successful” throughout Covid, Rowland adds.

For TriSpan, the prospect which excites them is what happens with the opening of more sites. “The outstanding success of some of the openings in the first year of our investment has really been outstandingly good… and consistent,” he says. “You have to have bit of a leap of faith opening in a place like Lincoln but it (the brand) has very strong appeal.”

Having worked with Asian concepts for more than 20 years, Rowland says he has been obsessed with Wagamama, Itsu and Wasabi and has always kept a wary eye on Pho. “The food is really very good. It is distinctive and has depth, and it’s unique because there is no other Vietnamese competitor.”

Remaining value for money is key

There are obviously pressures on the business in terms of cost, but Rowland says that Marrinan and the team are doing an excellent job of mitigating them “without shoving price back to the consumer”.

One of the main pillars of its business is to be well-priced, adds Marrinan. “It means a lot to customers and helps deliver sustainable demand for our product, so if there is a big crunch on the cost-of-living, we may be in a position where we will gain customers from certain areas of the market – premium casual, for example.”

Pho 5

TriSpan “forensically tracks” the pricing of competitors to the brands in its portfolio, which also includes Rosa’s Thai and Thunderbird Fried Chicken. “If Wagamama moves something, we know about it. We’re mindful to always be a value for money offer, where quality is foremost, but it’s as affordable to a student as it is a young professional or family,” says Rowland.

As well as its price point, Pho is keen to retain the culture that has made the business what it is today – and what appealed to TriSpan as an investor. “A large part of this job is leaving your ego at the door. The magic comes from the founders […] so we are lucky to have a very close relationship with them,” Marrinan explains. “They will probably be brand guardians for life.”

So what’s the end game? “I am very open with Pat about how we are financing the future growth of our funds, and we’ll do whatever is right for the business in conjunction with management,” explains Rowland. “I don’t think we have a fixed time frame on this, but equally you want to make sure there is strong momentum when you sell a business.”