Once the darling of the Thai restaurant scene, Busaba has had a tough few years, with falling profits and site closures. Now with a simplified offer and a fresh focus on the capital, it’s looking to bounce back
Terry Harrison shakes his head and looks down at his plate. The managing director of Busaba is reflecting on his two-year tenure at the Thai restaurant group, and it’s not all happy memories. “I had some dark days in the beginning,” he sighs. “But there are decisions you have to make for the future of the business.”
We’re chatting in the original Busaba in London’s Soho. The site was launched 20 years ago by Alan Yau as a follow-up to his hit Wagamama chain.
In 1999 it was one of the few restaurants in the area and became an instant hit thanks to its combination of punchy Thai cuisine, cool design, and affordable prices.
David Thompson, who later won Michelin stars for his Nahm restaurants in London and Bangkok, consulted on the menu, diners sat at sharing tables, and the restaurant didn’t serve dessert or coffee.
It may have been unconventional for the time, but Busaba still had 45-minute queues for a table snaking down Wardour Street.
“As an outsider it seemed very cool,” Harrison reminisces. “I was originally brought in for a lunchtime pep talk by my line manager, but I came back with friends and queued. Alan Yau in my eyes is a miracle worker, and I think Busaba was his greatest work.”
It was a residual fondness for the brand that helped lure Harrison back as MD in 2017. After seven years of working for PizzaExpress, then a further seven at Gondola Group when it owned chains including Byron, Zizzi and ASK Italian, he had sworn off the corporate world. Yet Busaba presented a challenge he couldn’t resist.
The past decade has not been an easy one for the Thai chain. Yau sold the business to private equity group Phoenix Capital Partners for an extraordinary £21.5m in 2008 when it had just three sites. Under its new owner, Busaba grew steadily to 13 London locations, with restaurants opening in St Albans, Liverpool and Manchester in 2016 (there was also a short-lived restaurant in Bicester Village that opened in 2011).
That same year the company secured a private debt deal worth £16m from Muzinich, a New York-based fixed income specialist, to fund its expansion. In a 2016 interview with MCA, Busaba’s then CEO Jason Myers spoke of growing the business to 30 restaurants by the end of 2018, with a view to reach 50 longer term. But things began to go south. Accounts for parent company Busaba Eathai Holdings show pre-tax losses tripled from £5.28m to just under £18m for the year to 27 May 2017. Restaurant EBITDA fell from £4.65m to £3.93m, while adjusted EBITDA dropped from £1.47m to minus £400,000.
In 2017 the cracks began to show. Restaurants in Manchester and Liverpool both closed, and a Dubai location – run under franchise – shut down. Harrison was brought in as MD, with Myers departing shortly after. Sites lined up for Leeds and Edinburgh were scrapped, and Busaba’s final regional restaurant, in St Albans, closed in 2018 as the group fell back to its London heartland.
Losing its way
So what went wrong? Harrison is clearly passionate about Busaba but feels the group “lost its way” outside the capital. He describes the regional restaurants as a derivative ‘electric version’ of the brand, which mixed its traditional dark-wood interiors with wall-art lettering and graphics of Buddhist monks. The menu had stretched to more than 80 dishes, and the branding confusingly changed from Busaba Eathai to Busaba Bangkok Thai.
“When you have a plan to expand nationally and the first few steps of that haven’t worked, suddenly everything starts to fall apart,” Harrison explains. “One of the mistakes was to take this wonderful idea and try to ‘Pop Art’ it. All the good aspects had been changed in the move up to Manchester and Liverpool. And if your internal team finds it overcomplicated, what must your customers be thinking?”
In London the restaurants were performing better, but still on a “downward trajectory”, according to Harrison. He says that the disparity between Busaba’s London and regional sites was most apparent in St Albans, the Hertfordshire city within the capital’s commuter belt, and describes closing the restaurant in 2018 as one of his “biggest disappointments”.
“People in St Albans were familiar with Busaba, and one of the accusations was that it was not the same as they got in London. They were right. We shot ourselves in the foot and tried to do this ‘son of Busaba’ concept that didn’t work. We had the opportunity and wasted it.”
Busaba’s story will be familiar to many in the casual dining sector. In 2018 alone, high street brands including Byron, Gourmet Burger Kitchen, Prezzo and Carluccio’s back-pedalled on expansion and closed sizeable chunks of their estates, blaming the usual mix of tough trading conditions and rising rents and rates. Harrison has his own ideas of where Busaba’s troubles might have started.
“It’s easy for me to criticise when I wasn’t part of it, and the management team did some good stuff, but ultimately Busaba suffered from the pressure from private equity money to grow quickly,” he says. “There’s been a groundswell away from that now. It doesn’t work for every brand and distracts from getting the food, service and ambience of the restaurants right.”
Busaba is now owned by Muzinich, which acquired a controlling stake in 2019 and felt the brand was “worth fighting for”, according to Harrison. “I have a chairman who is ex-Taco Bell and KFC. He’s a good old-fashioned operator who keeps me on my toes – quite rightly as the business doesn’t need any bright ideas getting in the way of being sensible.”
After a difficult few years, Busaba is now reassessing its place in the market. Clearly, some of the sheen has come off since 1999. Is it realistic to ever hope to recapture the magic? “I’m not trying to recreate what Alan did in 1999,” insists Harrison. “We’ve kept a lot of elements, but certain things he did are not relevant for this day and age.”
In this vein, Busaba has begun offering coffee and a short dessert menu for the first time. Each restaurant still bangs a gong before every service, but there’s been a reversal of the no-music policy. “When the first guest walks in and you don’t have music, it feels like a morgue. In 2017, half the restaurants still didn’t play any, Covent Garden only started to six months ago.”
Harrison’s goal has been to simplify the restaurant offer, including scrapping the ‘Busaba Bangkok Thai’ branding in favour of a neater ‘Busaba’ moniker and halving the number of dishes to 40-50 items in two menu launches. “Most people only order one of five dishes anyway,” he explains.
A refurbishment programme began with the restaurant in the Westfield London shopping centre, which Harrison described as looking “shoddy and terrible”, with overhauls of the Westfield Stratford and St Christopher’s Place restaurants following. The original Wardour Street site is in line for a revamp later this year.
There’s also been a refresh of staff uniforms and menu design, with a simplified flower logo introduced across the group’s 13 remaining London restaurants last year.
So where next for Busaba? “As we sit here today, we’ve got a profitable business with a sensible plan that might include some expansion,” Harrison says carefully. “I’ve got one restaurant on [Soho’s] Eastcastle Street that is still a slight worry. Although it makes money, we’re never going to see a return on investment because the rent is incredible. We have to be adaptable.”
Busaba works with Deliveroo, and around 15% of sales come from delivery spend.
Harrison admits there is ‘more competition and noise’ in the restaurant market compared with 20 years ago but is apparently unphased by the growth of other Thai chains. Rosa’s Thai Café, which started as a London market stall, was sold to private equity firm TriSpan in 2018 and has successfully grown to 18 restaurants in London, Leeds and Liverpool.
Meanwhile, Thai ‘tapas’ brand Giggling Squid has reached 34 sites in 10 years with restaurants mainly in the south of England, including a handful around the outskirts of London, with talk of reaching 70 locations by 2022.
“Busaba is very different from both those brands,” muses Harrison. “We are London-centric, whereas Giggling Squid does very well in the regions. I’d like to think Busaba is still the market leader in London, even though we’ve gone through a bit of a wobble.”
Wobble aside, he is keen to see the group open new restaurants in future. “There’s still lots of room in London for more Busabas east or south of the river,” says Harrison. “I would love to see Busaba as a 15-20 site business, but I don’t think there’ll ever be 200 of them.”
Would the brand ever dare to venture back outside London? “I’m not ruling out going back to Liverpool or Manchester, but at the right time,” he says. “It was a missed opportunity, but it was the right decision to come back to London and regroup. We learnt a lot of lessons, and we won’t make the same mistakes again.”
BIG INTERVIEW - BUSABA
Bangkok bounce back?
Terry Harrison shakes his head and looks down at his plate. The managing director of Busaba is reflecting on his two-year tenure at the Thai restaurant group, and it’s not all happy memories. “I had some dark days in the beginning,” he sighs. “But there are decisions you have to make for the future of the business.” We’re chatting in the original Busaba in London’s Soho. The site was launched 20 years ago by Alan Yau as a follow-up to his hit Wagamama chain. In 1999 it was one of the few restaurants in the area and became an instant hit thanks to its combination of punchy Thai cuisine, cool design, and affordable prices.