In a rare interview, sector investor Richard Caring, alongside new Ivy Collection chief executive and Bill’s chairman David Campbell, talks to Mark Wingett about the future of the high street; the impact of the uncertainty over Brexit; the market in general; and the next stages of development for Bill’s and the Ivy Collection
One of the first surprises on meeting Richard Caring – whose investments in the UK’s restaurant sector have seen the growth of brands such as Strada, Côte, Bill’s and currently the Ivy Collection – is his ringtone, which turns out to be Happy by Pharrell Williams. The phone rings as we are in the middle of a chat at a time when Caring is far from happy, as the subject has turned to business rates.
“I am surprised that any of us can stay in business, with rates as they are. It looks as though the Government is determined to put us out of business,” he says.
“I think it is going to cause a lot of problems. The amounts of money we are paying is unbelievable. Just in our Ivy Collection, our business rates this year will be £3.3m more than they were last year, which was £2.1m more than the year before, which was £900,000 more than the year before that. Unless you have a super structure I don’t know how a lot of these businesses on the high street are going to survive.
“The business rates are based on the rents that you pay, we tend to look for prime sites and we don’t own many freeholds, we are a prime neck on the block for business rates. There is no encouragement there. You are allowed to go back and try and get a rebate. I think we got something like 2% back this year, which didn’t make much difference.”
Focus and hard work vital
From backing the £31.5m management buyout of Caprice Holdings back in 2005, Caring has continually invested in concepts and management teams in the sector, starting with Strada, through Côte, to his current investments in Bill’s and the Ivy Collection, in the process, arguably, playing a significant role in evolving the high street and keeping it vibrant.
Business rates and Brexit are the two major factors he feels are impacting plans for his companies in the UK and the wider market here. In terms of the current market, he doesn’t believe it has become any more difficult as it “has always been that way”.
He says: “It has become more expensive. It is harder to make money today. The market is still there, it is a question of putting in time and effort. Is it harder work? It’s more precise, you have to be totally focused, you could probably get away with more two or three years ago than now. Everything has to be right, everything has to be 100%. You have to have a focus and a reason.”
Since he opened the first Ivy Collection site in Covent Garden four years ago, Caring, who also has a 30% stake in Soho House, has backed the rollout of the concept to 33 further locations, but uncertainly surrounding the market’s foreseeable future has led to a rethink of that rollout strategy.
He says: “We are aggressive in terms of expansion, but we are slowing down as far as being that aggressive because we don’t know where the market is going. This year, our investment in the business has doubled compared to the year before but, going forward, we are sitting on our hands and not taking new sites.”
He says that landlords are being more realistic. Unsurprisingly, with Caring’s involvement, the Ivy name being attached and the success of the Ivy Collection so far, he is inundated with sites and rent-free proposals and “all sorts of situations, such as capex commitments”.
“But until we resolve the issue around what’s going to happen with Brexit – I don’t know how many sites we have opened this year, probably 25 in the UK – then next year there will only be one or two,” he asserts. “Until we get some direction from the Government, we can’t take the risk on new sites. I think it is going to get worse. Our Government is ignoring everything right now, including what’s happening on the high street, apart from their own position. They seem to be so confused and self-serving, and the people who do have a voice, like the Chancellor or the Governor of the Bank of England are made out to be fools when they come out with these statements regarding the impact of Brexit, but I believe they know what they are talking about.
“As far as Government goes, when you look at the possibilities of what might happen, the leaders of both main parties, our ex-foreign secretary, in my mind they have no idea about business, or how to run a business or been involved in business. This is all very much politics to the point of power, and I think the country is getting left behind. We are living in a fool’s paradise right now and it is not going to continue.”
Birth of the Ivy Collection
Caring has owned the Ivy name, and the iconic eponymous restaurant in central London, for 11 years. He says: “I was told in the beginning that there was only one Ivy, and for eight of those years I would tell people the same. I woke up one day and asked why is there only one Ivy? I thought we could actually stretch this out. So, we came up with the Ivy Collection. Was I surprised by its success? Yes slightly. It has been tremendously successful, but we work hard at it, the product is good and
I believe it fills a gap in the market. I was surprised by the extent of the success but at no time can we ease back and offer anything less than 100%. Service, food, fit out, quality, investment in product, we have to concentrate 100% on that. The minute we pull back from that you see it immediately, the public aren’t fools, they know what they are looking for.”
The current top performing four Ivy sites are in Chelsea, Covent Garden, the City and Dublin, but Caring says “we take interesting money in smaller places”. When pushed on an average weekly sales figure, Caring says “enough” and David Campbell “high!”.
I have already written about how the Ivy Collection’s rollout and success reminds me of how Jamie’s Italian started. Taking the best sites and staff in key locations, but also being one of the few brands to be successful during a downturn. The challenge for Caring and Campbell, the former chief executive of Wagamama, is how they keep the Ivy Collection special.
Value and quality appreciated
Caring is adamant that they cannot and will not allow the concept to go backwards. He says: “I was speaking to David about this the other day. In terms of people and culture, we should have a team that starts in the very first one that we opened and everything starts to come from that direction as well as the ones we are opening.
“We refurb and reinvest the whole time. Every one of our branches gets secret diner visits every week, and anything below a 92% to 93% hit rate prompts an investigation as to why that has happened. It is crucial to us that we are testing continually, and these aren’t our own people but a third party company doing the visits. They rate every single part of the visit. People in this country do appreciate value and they appreciate quality. I don’t think we have exhausted the UK yet, but it has got to continue to be unique.”
Campbell adds: “It’s grown up fast. I see this as a football game; this is half time. We can slow down, refresh and move to the next stage of rolling out the Ivy and Harry’s.”
Caring visits every prospective site location and jokes that he “hadn’t been north of Highgate until I started doing this thing”. He continues: “It has been interesting and exciting. I don’t like to take chances. It has to be the best site, in the best street, in the best city/town, it also has to have some outside seating and daylight. It needs to be fresh and clear. We have been slightly lucky as many of the high-street banks are closing down and they normally have the best sites. We are prepared to spend more on a fit out than most people. I won’t settle for a secondary site anywhere.”
Of all the concepts Caring (pictured left with actress Goldie Hawn) has backed, Ivy Collection seems the most personal and he sees it at the beginning of its lifespan, with an overseas launch on the agenda. He says: “I have never been approached regarding a sale of the Ivy, not that I would consider one. I believe the Ivy is just beginning. We have a long way to go.
“For instance, we are talking about going overseas. We only have 34 sites in the UK we don’t want an Ivy on every corner, but there is space for more. We have the flexibility with the model – Grill/Brasserie/Café – they are different sizes and each serves their community differently. They have to have their own individual identities, each one has to have its own character. Our staff know the local people and communicate with the local community.
So, where does he see the Ivy brand working outside the UK? He says: “You can’t really count Dublin as overseas, but that has been open for six weeks and has been phenomenal. It is already our third-best-performing site. We are looking at Amsterdam at the moment and at Paris. We will take it abroad at some point.
“You have to blend the offer slightly to the local scene. In the UK, the interesting thing about the Ivy is that whether it is in Edinburgh or Surrey it is the same dishes that are selling. Once we go overseas we will have to take into consideration each location in terms of changes to the menu. I am sure the brand will travel.”
Caring is adamant that the success of the Ivy Collection has not impacted Bill’s in any way. Caring acquired a controlling stake in the then two-strong Bill’s in 2008. It has since grown to more than 80 sites in the UK, but the past 12 to 18 months has been a period of management changes and consolidation for the all-day casual-dining concept.
In January, Duncan Garrood, the former head of Punch, replaced Mark Fox as its chief executive and is overseeing the start of a new round of refurbishments.
Caring says: “I don’t believe that one has anything to do with the other, they serve two different types of clientele and we have worked very hard to make sure they don’t bang into each other.
“We are going through a refurbishment programme at Bill’s. We have completed four, there are 82 sites across the country, the menus are very different, the price point is very different and the image is very different. The Ivy is very much a premium proposition, whereas Bill’s is much more casual, almost borrowing a bit of Soho House in its imagery.”
New life for Bill’s
Last summer, there was speculation that Caring was looking to sell Bill’s, with BC Partners, the current backers of Côte, tentatively linked to the business. Caring says: “We had approaches for Bill’s but, at that point, I wasn’t close enough to the business and we went through a situation of the business getting tired. We had approaches but I didn’t think it was dressed well enough to be sold – it needed help. That’s why we have got behind it and that’s part of the reason why David has joined us.
“I think Bill’s has a great future, it needs a bit of love as it got left behind a bit. We have a new management team in place, and I think we have a clear strategy in place to make it work properly.”
Last year saw a false start with the company carrying out three refurbishments, which Caring admits he didn’t spend enough attention on and that they were too close to the Ivy Collection in look and feel. He admits: “When I saw what they had done I had a nervous breakdown and they were ripped out immediately and changed. Bill’s is trading around the market level and, I will be totally honest with you, the market is probably down around 3% to 4%. Where we have the sites refurbed they are doing much better. I am confident we can lift this business, hugely, over the next 18 months or so. That means taking our foot off the expansion pedal and concentrating on improving the existing estate.”
He describes plans to do a smaller, grab-and-go version of Bill’s – working title Little Bill’s – as a hiccup. “It was something that wasn’t meant to happen,” he says. “It was a conversation and someone got carried away and went down a street without discussing it in detail and they are no longer with this company. I don’t believe it would have worked. I didn’t like the idea of it, unfortunately one of our guys pressed the button on it and spent £1m, unbeknown to me. When I found out about it and saw the plans I canned it. It would have been a disaster, I am convinced of that, and a million pounds was a cheap get out for us.”
In a couple of weeks’ time, Caring will open the second site under his new Italian concept, Harry’s Dolce Vita, in Marylebone. It is another concept he believes has roll-out potential. He says: “Harry’s has started very well. The first site that we opened just behind Harrods is on budget and we are very happy with it.
“That is one brand we are looking to do another site with, but haven’t found the right location yet. It is definitely a roll-out concept. Every main high street can handle a really good Italian restaurant, an Ivy, a really good Chinese restaurant, a really good Indian restaurant. They can all live together. Harry’s can work in all the cities we have an Ivy.”
The second Harry’s will be followed next year by the first site under a further format to be evolved out of the Caprice Holdings portfolio – Caprice Café. Caring will open the new concept on the site of former Princess Garden of Mayfair restaurant in North Audley Street, which he acquired more than two years ago. As with the Ivy Collection
and Harry’s Bar/Dolce Vita, the new concept will be a more accessible version of an existing Caprice Holdings restaurant – this time Le Caprice, the company’s modern British restaurant in St James’s, Piccadilly. He says: “It will be very fresh, very bright, it will be an attractive offer. We start on site next January. I think that concept has a shot.”
For the first time in well over a decade that new concept won’t have the input of Andy Bassadone, who has worked with Caring, alongside Chris Benians and Nick Fiddler, through Strada, Côte, Bill’s and the Ivy Collection. It is thought that Bassadone and Fiddler stepped down from the board of Bill’s earlier this year and no longer have an investment in the business.
Caring says: “Andy is no longer involved in any of our companies. Chris is the food man, the guy behind the menus at the Ivy and Bill’s. He is the only one of the three musketeers who is still involved in the business and the only one who has an in-vestment in them.”
Alongside his more high-street-focused concepts, Caring is still looking at opportunities to open more sites under the Sexy Fish name and admits he would also like to do an Indian cuisine-influenced sister restaurant called Sexy Elephant. He has also previously trademarked the name Sexy Dragon, leading to speculation that an Asian restaurant could also be added to that portfolio. Caring invested c£17m in opening the original Sexy Fish in Berkeley Square in October 2015.
He says: “We are taking Sexy Fish to Miami. We were taking it to the City, but Brexit has stopped us doing anything else here right now. We were going to do a Sexy Elephant, but this whole Brexit thing has curtailed that. To do a Sexy Elephant is a £15m-plus investment in one site. Is that something I want to do today? It means taking on a hugely expensive lease, taking on 150 new staff, spending fortunes on a fit out, I am not confident in this marketplace now to make that call. Maybe I am overreacting, is there a Sexy Elephant somewhere? Yes there is, and we will do it, but not now.
“We saw a couple of sites in the City that were great so I am hoping we can get some white smoke from the Government at some point to understand we are in some form of trade deal and some form of position with the EU where we can still employ people that we want to employ. Then we are happy to motor on.”
Investments being eyed up
For someone who is taking his foot off the pedal, Caring still has plenty in his inbox, that’s without mentioning that Soho House plans to open in nine countries in the next 12 months and explore an IPO soon.
He also admits that he is looking at other investment opportunities, including bringing new international concepts into the UK.
He says: “We are looking to invest, but everything has been put on hold. There are a couple of brands that I have spoken to David about that would be great purchases for us that are available that I would like to bring to this country, but I am not willing to do that in the current climate.”
And, what operators and brands does he currently admire? He says: “Any operator that is successful today – whether that is Corbin & King or whoever is successful in this industry, at this time, continuing to make money – I think they are all great.
“Because it is a rough, tough place to be, with business rates, the Brexit situation, with high streets cracking up all over the place, I admire anyone who can stay in business in this industry right now.”
Proceeding with due care
In a rare interview, sector investor Richard Caring, alongside new Ivy Collection chief executive and Bill’s chairman David Campbell, talks to Mark Wingett about the future of the high street; the impact of the uncertainty over Brexit; the market in general; and the next stages of development for Bill’s and the Ivy Collection.