Steve Hill, the new chief executive at Las Iguanas, talks to Mark Wingett about how a meeting over a curry got him the only job he “would return to the sector for” and describes the challenge he faces in not “mucking up” an exceptional business
Former Wagamama chief executive Steve Hill, who oversaw the growth of the casual-dining brand from 28 UK sites to 82 and built its international platform, was enjoying life away from the glare of the eating-out market until a call from Las Iguanas co-founder Eren Ali and an off-hand comment over a meal placed him at the forefront of another growth story.
He says: “Eren called me up and said ‘let’s have a curry and shoot the breeze’. This would have been October 2012, so I had been out of the game for around four months. He asked what I had planned, so I said, ‘nothing, just chilling out’. He pushed me a bit more and again asked whether I had any plans, saying that I must have some. I said in a totally flippant remark that, if he ever decided to move on, I would take his job. He said, ‘right, OK’. We shook hands and went our separate ways but said that we should catch up like that more often.
“Three months later we met again, it was my turn to pay, and we had another chat over a curry. Then he called me last May, so roughly a year after I left Wagamama, and asked me if I had a job yet. I said, ‘unless you are leaving and offering me a job I am not bothering’. He said, “right, I need to see you. I asked when and he said, ‘I am on holiday tomorrow, so how about tonight’. I went to see him and he said, ‘I would like you to think about coming on board, initially as a non-executive with a view to becoming chief executive as I would like to start thinking about an exit. I am going away for a couple of weeks’ holiday, so think about it and we’ll have a chat when I get back’.”
The pair spent more time discussing whether they had a similar view on the world, because – as Hill says – Ali “obviously doesn’t want someone who is going to destroy the culture of the business, it is his baby, and I’d be exactly the same in his position”.
“I came on board as non-executive last September and moved up to chief executive at the start of the year. The whole thing about the non-executive period was so they could have a look at me and I could look at the business. It was a nice cushion to have, but after just a couple of hours in the business I knew this was a company with a strong culture, great people and passionate about what it does – a fantastic brand. It is everything we had at Wagamama, and it has huge potential.”
Culture and ethos are key
It becomes clear very quickly that ethos and culture are very important to Hill, something that also attracted him to the role of chairman at the highly-regarded Vietnamese chain Pho – and a key part of the success and popularity of Wagamama.
He says: “There is a brilliant ethos at Las Iguanas and you can’t come in and change it or manufacture it. I was on the train chatting to a sales coach who lectures to management consultants, he asked me what happens when you go into a company with one ethos and you want to change it.
“I said, ‘you don’t go in’. Why would you go into a business that actually has a culture, that has nothing wrong with it, and turn it on its head? You’d be trying to push water up a hill. I said I would always look for a business with a culture that I can buy into, that I would work for no matter what job I went in to do, and then go from there. There will always be a few things in a business that you want to tweak to your way of thinking, but here it is definitely more a case of evolution than revolution.”
It is not just in the form of Ian Neill (ex-chief executive and chairman at Wagamama) as Las Iguanas chairman that Hill sees similarities between early-stage Wagamama and the Latin American restaurant group. “Eren and the team have done a fantastic job, they have never been on the back foot,” he says.
“They have never sat on their laurels. There is a very strong culture of change in the business, not to its detriment, but there is a willingness for change – to be ahead of the game. You don’t expand the business without the people to support the growth. They nail customer feedback.
“The ethos is the same, the culture is very strong, it is about doing the right thing for the people, listening to the people, because without them you haven’t got anything. Even if you retain the people they lose heart, they are just turning up, they have to see a pathway, a route for development.”
The presence of Neill obviously played a significant part in Hill’s decision to take the role. The pair’s work at Wagamama has been well-documented and Hill was keen to talk with his former mentor about the company and his own future.
He says: “Ian and I were talking once every two days. One of the first calls I made to him was to ask, ‘before I say yes to being chief executive, are you staying on as my chairman’. He said, ‘if you say yes, then I will stay’.”
There will be no wholesale personnel changes under Hill: “The team here is very good. I find it very odd when people go in and fire all the senior management and bring a whole new team in. You wouldn’t do that unless the results are bad, the culture’s bad and you believe it is the correlation between the two. In some places people bring in a “trusted lieutenant”, but I didn’t do that at Wagamama and I won’t be doing it here.”
Options for the group
As we reported last year, Las Iguanas is on the verge of appointing BDO to explore options for the group, which could lead to a possible sale of the brand.
The group produced EBITDA of £5.6m for the year to the end of March. Taking into account new openings since the year-end, it is thought the business is on track to produce EBITDA in its current financial year of between £7m and £8m, which suggests it could be valued at up to £100m. It is understood that a private-equity backed management buyout of the company led by Hill would be the preferred course if a sale was explored.
At Wagamama, Hill oversaw its sale of the business by Lion Capital to Duke Street Capital in 2011 for c.£215m, generating a shareholder return in excess of 3x investment. Bowmark acquired Las Iguanas for £27m in 2006 and the group saw turnover break the £40m mark in the year to 30 March 2013.
Hill believes there is huge potential for a brand that, over the past year, has moved into out-of-town locations and grown its openings pipeline. A former colleague at Wagamama, Sharon Cawthorne, has been brought on board to advise on its property plans. Research carried out by PwC suggests the brand can grow to a minimum of 120 to 130 sites in the UK, while international opportunities are being explored.
Hill says: “The guys have been looking at international locations, there is a lot in place on that front. They have talked to a number of people but not signed with anyone. We are currently looking at what would be the best place to start.
“On the basis that a deal for the business will probably take place over the next 12 months, it is probably something that will wait until the new owners are in place. It is a significant development for the group and if you are at a point of sale and the new people come in and don’t
agree then you are back to square one. But I believe there is real potential for the brand overseas.”
Hill underlines the point that he is not just here for a deal. Although he has more of a watching brief at the moment, he is keen to point out that he is for “the long haul”. Hill says: “My father had a couple of sayings, one was ‘if it ain’t broke, don’t fix it’ and that is what I find with Las. It is about evolution, continuing to evolve the brand to be the best that it can be.”