Five years into his role as chief executive of the Capricorn Ventures-backed Gourmet Burger Kitchen (GBK) and it is fair to say that Alasdair Murdoch has entered the “marginal gains” stage of his tenure with the brand. The term made famous by British Cycling’s performance director Dave Brailsford is now being adapted as Murdoch explains to me the 68-strong group’s decision to invest more on its crockery and buns.
He says: “We are constantly investing in our offer and our teams. At present, that is focused on new presentation of our food, including new plates that are all hand-painted. Also we are investing 4p to 5p more on a bun, which is part of our new menu being rolled out across the estate after being in three trial sites. The other crucial part of the business we are focusing on is driving engagement of teams.”
Murdoch says that on the back of the investment in the fabric of the group’s offer, it is also keen to make sure its teams are more knowledgeable about the food they are offering. He says: “We are trying to drive that connection. We are trying to get our teams to show a bit more personality and be a bit more natural, less scripted. You can learn a lot from people like Pret on how they engage with each consumer.”
He says that the company’s staff retention levels are OK, but “everyone is waiting to see what is going to happen with the living wage”. He says: “We are all putting together our own strategies in terms of the living wage but that will move the labour market. The question is where and by how much.”
He says that the key people for the company to recruit are grill chefs. “There is a dearth of grill chefs across the catering industry at the moment. It is a hard job,” says Murdoch. To combat this, the group is launching a new apprenticeship course aimed at recruiting and training more grill chefs. The new apprenticeship scheme will be in the form of an NVQ and run in conjunction with Westminster College. Murdoch says: “We have plans to open 10 sites in our current financial year, but will look to increase that figure in subsequent years so we need to have the workforce to be able to match that ambition. Grill chefs play a significant part in our business, but recruiting the right people is becoming an issue, we hope that this new course will help solve that. Hopefully that drives more loyalty and our grill chefs become our head chefs. So we will see how that goes.”
Reinvest and push on But what about his own engagement with the business he took on five years ago when Capricorn Ventures, the backer of Nando’s, acquired the business from Clapham House Group?
He says: “I’m still totally energised and engaged. As with any business, there can be lulls, the process of re-engaging our teams and driving a point of difference, elevating the quality of our food presentation is very exciting and definitely keeps me engaged. Of course, it also helps when you wake up to come to work and find good numbers and have good solid like-for-like sales growth, which allows you to reinvest and do the things you want to do inside the business. At the moment, I am spending a lot of time training staff about our new customer journey.
“You have to realise that brands that go backwards haven’t reinvested and pushed on, we are still looking at ways to improve, to try to stay ahead, to keep driving for- ward. You are never as good as you think you are, or as bad. That keeps me moti-vated. I am also convinced that the time to make changes to your organisation is when you are doing well, not to bank that goodwill/investment, hence some of the changes we are making.”
Tech tactics
The brand has arguably been at the forefront when it comes to investing in technology to drive consumer engagement, being early adopters of having its own app, and click and collect. Murdoch says: “Engagement has been fantastic through our app. We have tried to learn from the fashion retailers in this respect because the online experience with them is very good, we tried to use the same principles – 25% of people who use the app are more loyal.
“We try very hard not to go down the route of getting people to ‘sign up for our mailing list’. We invest significantly in technology, in building and use our database to target our guests, but you have to be careful on the level of engagement people want. We will nudge people two or three times but then not again. One of the things that the Clapham House guys did well was put in place really good systems, which are very robust. Very robust back-of-house and till systems, which has made it easier for us to have an app that works, which might be harder for other people to develop and launch.”
The next stage of investment in technology and engagement has been the recent launch of a trial in conjunction with Flypay where consumers can order at their table through their smartphones at its sites in Soho and Bayswater. Murdoch says that, if successful, this will be eventually rolled out across the company. He says: “The order-at-the-table trial seemed like a natural progression for us. We can’t stand still in terms of looking at new ways to improve our offer.”
In terms of delivery/takeaway, the group works with Deliveroo, and Murdoch says he is “quite comfortable with sales through takeaway being currently around 10%”.
“There is room for more growth there but you have to be careful that your whole business doesn’t go totally takeaway,” he says. “I would be comfortable with, say, 17% of sales coming through takeaway, but perhaps concerned if it gets to 20%. We have invested a lot in packaging so when you take the product home it looks like it does in the restaurant. You have to give consumers the option but carefully manage it.”
Murdoch, who dismissed speculation that group was currently considering its funding options, told M&C Allegra Report that the company had experienced double-digit, like-for-like growth for the year to date and was on track to post turnover of c£70m in its current financial year, doubling the figure from when the brand was acquired from Clapham House.
With Murdoch and Capricorn coming up to their fifth anniversary with GBK, questions regarding its future ownership are inevitable. Murdoch says: “There are always rumours. People may talk to us about it, but at this stage we are just bubbling on, there is no process at this stage. Could there be in the future? Yes, but when is that going to be? Six months? Three years? Who knows? Our backers might decide to hold on. Historically, our shareholders are holders not sellers. We are investing hard in the fabric of the business to make it sustainable for the next five, 10, 20 years.”
Openings in the pipeline
The group will have 72 sites by end of its latest financial year next March, and Murdoch believes it can reach 100 by its 2018/19 year end. He says: “We will look to open more than 10 next year. What is really important for us is opening well. There is a lot of skill in our kitchens, so we know we open better by using people already in our estate. We spend a fair amount of time looking at our pipeline. We want to grow by one area manager a year. We like a mixture of internal and external appointments, that mix of experience in the business and a fresh perspective. It is about building the foundations and I think we have done that well.
“I don’t look at a specific figure for how many GBKs we can eventually open in the UK, we look at demand. So we see most of our growth coming from outside London. As Tom [Byng, founder of Byron] recently said in M&C, we are also lucky – like Byron – to have a good London estate, c35 sites inside the M25, so we will open one or two a year there. We now have two people working full time on acquisitions, split between the north and south of the UK. We want to be able to get out there and spend time counting boots on the ground, to see the footfall for ourselves before making decisions on locations. One of the challenges of being a burger brand, landlords don’t want five or six of them in the same scheme. We need to be able to stand out to make their decision easier.
“Half of our estate are sub 50-cover sites, which gives us good flexibility. Our service model allows us to do that and make them work because your table turnover is so much faster. At Westfield Stratford, our sales per square foot are in the top five of all F&B, just because we are turning the table so quickly. The informality and having it your way is part of our appeal. We have a good, strong management team that has the ability to run more sites than we currently have. There has been very little churn, so we have the stability there.”
The company also operates seven sites in the Middle East and six sites in Ireland. Murdoch, who was previously chief executive of PizzaExpress’s international arm, says: “We have tried to stabilise those operations and update their systems. Could that be a future plank of growth? Yes. Is that going to happen tomorrow? No. The UK is our prime focus. Going international you have to go to a place and get scale. You need three or four, you need to have some form of structure logistically. We are currently remodelling the estate in the Middle East with a new partner and it is going OK. We will grow with him, but at a steady pace.”
Four years after beginning its refurbishment cycle, the group is getting ready to start again. Murdoch says: “What is really reassuring is going back around, say to Kingston, which we refreshed four years ago, and know that the foundation is already there so it just needs a sparkle. The initial investment works. The end of the current cycle of refurbishments across the estate now gives us the foundation to be able to look at how we can improve other parts of the business.”
Turnover effectively doubled
That stability and refurbishment programme has seen the brand reporting 17 consecutive quarters of like-for-like growth, and Murdoch says that trading had been “strong for a really long time”. He says: “Three quarters of our sales growth is driven by covers, either the same people coming in more often, as opposed to spend. We came from such a long way back, in terms of losing market share to other operators, in particular, Byron, but I am sure we have now taken some back.
“I don’t think people realise how big we are and that suits us really. It is only really in the past year or so that we have engaged a consumer PR and started to get a bit more proactive in that sense. Such as trying to get back into the influential blogs, etc.
“We now have confidence in what we can offer, there is more substance. We are entering our fifth year, with four years of good like-for-like growth behind us. When we acquired the business, our unit average weekly sales was £13,000, which in reflection is too low. Now it is £20,000. We will also have effectively doubled our turnover from the time we acquired the business to around £70m this year.”
