Operators in London often look to the US for inspiration and to find out what is on trend. Should they instead be looking to the talent in the north of their own country. Daniel Cornwell, managing director of SPE Resourcing, looks at the diversity outside the M25 and whether the northern powerhouse can challenge the capital

I’ve lived in the north, off and on, for more than two thirds of my adult life, having arrived in Sheffield in 1993 as a starry-eyed student.

The changes in that time are beyond measure and, for me, I have seen the strong sense of identity and belonging I have always felt up here, echoed in the approach to food and drink operations; welcoming, unpretentious, with a warmth and authenticity sometimes missing in other parts of the country. Up here it isn’t just about ‘rolling a brand out’, ‘return on capital investment’ or ‘a land grab’.

Over the past decade, with the explosion in branded casual-dining businesses and brand-led pub groups, it’s fair to say most ‘large-scale’ operators have started in the south and have grown into the north, either organically or through acquisition.

It is noticeable that the most successful of these businesses now operating in Manchester, Leeds or Liverpool have done so in a respectful and authentic way.

South faces pressure

Take Hawksmoor for example: for its first venture outside of London it picked Manchester, but stayed true to its roots; no gimmicks, just a great product and an engaged Mancunian team. It tried to fit into Manchester, it didn’t make Manchester fit for the group.

The strength in the independent nature of the north is now shown in other ways, namely in the operators that have started up here and have now grown their single-site independent businesses into thriving multi-site often ‘multi-branded’ operations. Whereas many southern-based businesses might get noticed by investors or PE houses more quickly and then they’re under pressure to ‘roll out’ a brand, they have had the time to hone their businesses; innovate, focus on their customers.

The lack of overt customer brands for many means generally they’re more flexible to react to trends in the marketplace, and this hasn’t gone unnoticed by investment houses like Graphite (one of Hawksmoor’s backers) who, in 2016 bought New World Trading Company from Living Ventures – itself a bastion of the north.

Defending their independence

New World now has sites across the UK and it got me wondering if it could start a shift in northern companies moving south. I suspect the answer is ‘possibly’.

However, when talking to small northern-based casual-dining and bar operators that are (rightly) receiving all the plaudits at the moment, the thinking is that their natural next locations would be in the north or Scotland – Liverpool, Leeds and Edinburgh – and not London. Most are cautious of the London PE scene, one even said to me recently that ‘they [the PE house] just didn’t get us’, this despite the promise of a well-trodden operations manual and wealth beyond most people’s reach.

Why, then, am I not so sure a deal like the NWTC/Graphite one will lead to a flood of similar ones? It’s partly a case of risk vs reward and also because of a likely desire to keep the operations tight. There is also the challenge that what is on trend and agile in Manchester may not be in Muswell Hill. That’s before we even get on to the rents and rates.

I suspect in the main, however it’s because the people that run these businesses are from the north, and they are fiercely defensive of the independence of the culture of their towns and cities which is embodied in the culture of the companies they run.

The fun factor

It’s hard to believe for some, but why would they want ubiquity? Why would they want those high rents and labour/recruitment challenges, when there’s plenty of room for growth along the M62. The ones growing the fastest and most sustainably up here are the ones run by locals who understand the independent nature of the north.

Just look at Trof, Bundobust, Fazenda, Black Dog, Rose Four Group, the Gary Neville-backed GG hospitality Group et al.

These are all still independently owned and run by northerners, for northerners, in the north. My guess is that if they go too far afield they lose some of their sense of identity, of what makes them unique, of why they’re loved.

When coupled with the risk, and the fact that in the meantime they are having far too much fun up here, why would they want to do anything else?

Daniel Cornwell (@cornwelldaniel) is a sector investor, including in Korubu Marketing, and managing director of SPE Resourcing

 

 

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