David Page: ‘Fulham Shore can open up to 250 sites’

MCA caught up with David Page, executive chairman of Fulham Shore following last week’s trading update, the highlight of which was the double digit growth in revenues during August and early September.

During the conversation, Page spoke about how hospitality operators such as Fulham Shore, that have good covenants and offer an experience to people, are able to benefit from the need to fill empty prime pitch shops. He discusses the locations that form part of the company’s planned 20% expansion in its estate during the current financial year, as well as the increased importance of delivery, even after reopening, while being mindful of the potential disruption delivery can have on dine-in customers. 

The property market

“Prime pitches in every town have imploded,” stated Page, before suggesting that the current high levels of retail vacancies are helping hospitality operators who want to expand. “Landlords and councils are busy trying to fill them with coffee shops and restaurants because they are the only people that are viable to trade against the internet, because they give people experiences that you can’t replicate on the internet.”

Fulham Shore is clearly benefitting from this trend, having previously made it known that the company is achieving rental deals that are 40% lower than they were pre-Covid.

Page suggests that many good sites, previously occupied by retailers, are now becoming available at much reduced rental levels. He explained that initially rents are currently starting with as much as a 50% discount to pre-Covid levels, but over a five-to-ten-year view are likely to return close to previous levels.

Page added: “Not only are the rental deals 40% cheaper, but we are also being given long rent-free periods. Two or three years ago, the normal rent-free period was three months. And now we are getting rent frees of between 12 and 18 months because of our covenant.”

Page highlights a couple of unusual situations that are unlikely to happen often: “We are being given cash to open restaurants. And we have opened a restaurant for nothing, where the landlord paid for the rebranding work, and now that restaurant is taking £40,000 a week.” Page adds that this latter restaurant offers a good deal for the landlord also as the site is on a turnover rent, an increasingly popular move, he says.

Expansion plans

It is with good reason that David Page takes a deep breath before sharing details of Fulham Shore’s current expansion plans. The list of pipeline sites is long and represents a 20% increase in its estate. The pipeline is dominated by the Franco Manca brand, with 10 new Franco Manca sites earmarked for opening compared to five more The Real Greek sites.

“We are infilling in London in areas where we aren’t currently,” he begins, before listing Baker Street, Blackheath, as well as sites in Soho and the West End of Oxford Street. Page also mentions sites in the London commuter belt such as Bishop’s Stortford and Horsham.

“We are going up the East Coast and have agreed offers on places in Peterborough, Newcastle and Lincoln. We have also agreed terms for two Real Greeks in Manchester where we aren’t present at the moment, as well as another Franco Manca in Manchester.”

By the end of the financial year, Fulham Shore is on track to have an estate consisting of 90 sites. “Twenty-five years ago,” says Page, “A business such as ours which is selling food at about £12 per head could have operated up to 400 sites in the UK.

However, with so much competition, high streets changing, and online activity, it is more likely that we can open up to 250 sites.”

This suggests, based on projected end-of-year estate ratios, there could eventually be approximately 145 Franco Mancas and 55 The Real Greeks operating in the UK.

Delivery, takeout and outdoor

Both during and post lockdown, Fulham Shore derives a large proportion of its sales mix through delivery and takeout, and as part of this interview Page highlighted plans to trial a new ‘light kitchen’ concept on two sites in London. More details can be found in a separate MCA article here.

“Delivery has doubled from what it was two years ago,” states Page, suggesting it is, in large part, responsible for the double-digit overall sales growth that Fulham Shore as a whole is currently experiencing. “Pre-Covid delivery represented 15% of sales, now it is up at 30%, post the removal of all trading restrictions.”

Most delivery sales continue to be heavily skewed towards the Franco Manca brand.

But it isn’t all about delivery: “There is still lots of room for people to come in and dine in the restaurant,” he adds.

Page is aware of the possible disruption that delivery drivers can cause for diners so, wherever possible, the company is introducing separate entrances for drivers across both the Franco Manca and The Real Greek estate.

Another area of growth for Fulham Shore is outdoor seating, with many Real Greek sites having permanent outdoor seating, which is helping to boost sales at the brand. “Most people are still very reluctant, certainly at my age, over 50 or 60, to enter a really crowded restaurant.

“We have less outside seating at Franca Manca but wherever we can we utilise them.”

Staffing, supply and input costs

“We haven’t suffered the trauma of having no staff,” states Page. “At Franco Manca we managed to keep hold of a lot of our staff, because we stayed open for delivery and takeout.”

“We paid them 120% of their normal salary during takeout and delivery times, and the lockdown periods and we’ve retained that going forward.” Page goes on to suggest that the company offers among the best rates of pay in the sector.

“Most of our staff went on flexi-furlough because they were either working in the takeout delivery section of the business or they were at home. We were doing good business during lockdown periods, as we needed fewer than normal staff, so it proved to be very profitable for the company.”

Page suggests that there are currently no issues with supply, having secured the supply of many products such as tomato, flour and wine several months in advance.

With trading volumes up between 20 and 30% currently, Page indicates that the company is managing to keep input costs under control, “because you you’re getting a lot more goods from your suppliers and therefore able to keep prices the same because you’re giving them more volume.”

Future trading

Based on Page’s comments, an ongoing focus on delivery, takeout and outdoor dining is clear and this broad, multi-channel approach could turn out to be helpful when it comes to navigating any potential changes in future trading patterns.

“We are prepared for what the government says,” states Page, referring to any Covid-related announcements during the autumn and winter months. “We have previously pivoted towards delivery and takeout. We will wait and see what they say, and we will adapt the business accordingly.”