Coffee house
FROM start to finish, Tim Penrose's four-year-old business life is characterised by learning curves, near misses, sleepless nights and an insatiable appetite to realise a personal vision.
Many readers will sense a familiar ring to such paradoxes in an industry where being your own boss and pursuing a heartfelt desire are common themes.
Tim Penrose is no exception, but he is exceptional in his capacity both to thrive and to struggle simultaneously. In setting up his coffee house chain, Hudson's, he has experienced massive debts, staffing chaos and a chain of panic measures alongside company expansion, roaring turnover at the Birmingham shop and attainment of the coveted UK Tea House award from Egon Ronay's Just A Bite Guide in 1993.
This cocktail of success and crisis is probably an accurate reflection of 29-year-old Penrose's idiosyncratic personality.
Apart from a brief stint learning the ropes at McDonald's on a £2.48 per hour wage, Penrose's pre-1990 life was as a funeral director for the UK's largest firm of undertakers, where he started as a 17-year-old trainee and rose to become personal assistant to the chairman.
After twelve years in that industry, he decided to turn his hand to the upmarket coffee house business. Donning the fetchingly formal tails of his former career, the Hudson's staff uniform was born and with it an atmosphere and style to suit.
His choice of downtown Birmingham, not usually associated with the genteel refinery of yesteryear, seems an unlikely starting point, yet this is where Penrose chose to begin.
After scraping together a £6,500 loan and a £2,500 overdraft facility, he moulded his idea of a concept that would offer gourmet sandwiches and snacks and a wide array of quality beverages, all served with studiedcivility.
Service is Penrose's biggest hobby horse. First as undertaker, now as entrepreneur, he sees it as the ultimate defining feature. He says: "I spent the first year working my guts out. I was running around like a lunatic. People told me I was like Basil Fawlty because I had this obsession with getting the service and the food right. My wife and I sat up in bed and wrote out lists of possible sandwiches for the menu."
Refined taste extends beyond the menu, and Hudson's aim is to recreate the feel of pre-war England in both service and decor.
A visit to the flagship Birmingham Hudson's in the slick City Plaza shopping mall, brings an immediate sense of being transported back to the roaring 1920s.
Art deco memorabilia, 1920s newspapers and dog-eared boxes of cerebral board games dot the shop's Green Room and enhance the mood of sophisticated cordiality.
That at least is Penrose's hope and he refers proudly to a gathering bedrock of loyal "clients".
We glance at the packed lunch time trade, revealing a customer profile which runs the gamut of Brummie folk. Elderly ladies, a family, several couples and a few formally dressed teenagers fill out the 50-seat café.
The bustling shop proudly displays its Egon Ronay plaque and is conspicuously full, in stark contrast to its neighbours: a cluster of less photogenic cafés and restaurants.
But a coffee shop should not just be judged by its covers. Behind the Jeeves and Wooster mask is a tale of woe. Penrose explains: "Much of the time there has been just enough money in the bank to pay the wages. In undertaking we used to say that a good funeral director is like a swan. He appears graceful but beneath the water surface, he's pedalling away madly."
Penrose's pedalling began shortly after opening shop, when he twice felt obliged to expand, to prevent the siting of a hot potato stall beside his upmarket "dream".
Although achieving a weekly turnover of £3,800 by September 1991, the newly enlarged 50-seat coffee house had set Penrose back £13,000 per year in additional rent, together with a £16,000 bill for further fixtures and fittings.
He was unable to resist when approached by a London property company early in 1992. It offered a favourable lease to set up another outlet in its shopping centre in Coventry along with £150,000 in development funds. Penrose envisaged using only part of that sum for Coventry while channelling the rest into a morecomplete fit-out for the Birmingham outlet.
But as he explains: "The Coventry shop fit cost a lot more than planned and it still looked like an upmarket bistro rather than my idea of comfy old world. I was starting to lose control."
"Technical difficulties" and "tricky management" are blamed for a series of headaches at the Coventry site, which meant that it did not open for business until January 1993.
By this time, Penrose was in direfinancial straits. When the bank realised that he had lost £80,000 during 1992, it called in the overdraft, sending Penrose into a financial tailspin.
He admits: "I was about to go under - then I was offered another favourable deal at a site in Harrogate". This time it was a different property company knocking at the door with sweeteners. Na‹vely, Penrose imagined that he could once again rob Peter to pay Paul.
The shop fitters moved into the Yorkshire site and by April 1993 it was open for business. Thus was Hudson's Frankenstein born.
Location, poor management, the recession and competition from the well-established Betty's tearooms were blamed for the failure of the Harrogate shop.
Symptomatic of the mess was an annual staff turnover of 64 (total company workforce is only 50) and a chef who during a confrontation held a knife to Penrose's throat.
As well as the time and logistical problems of regular travel from the Midlands to North Yorkshire, Penrose had to deal with the embarrassment of staff smoking cannabis, stock "walking" and a manager whose strong point was not management.
Penrose recalls: "We sent up mystery customers and they would wait nine minutes for a beverage while the manager was sat in the armchair reading a magazine. I could see the whole thing going out of control and if I had been sensible, I'd have called in the receivers. But I'm not sensible, I'm Tim Penrose. I remortgaged my house for £20,000 and borrowed £25,000 from my father. I was stopping cheques and the bank manager was going berserk."
The said Lloyds bank manager then delivered a public dressing-down to the beleaguered Penrose, who shouted back and moved on to bank with the Midland.
His spirits were at a low ebb. "The accounts were all so confused, I was thinking about jacking it in. I was running a £60,000 overdraft without a facility. I was flipping."
Then the original development company reappeared, offering a new site in Northampton with development funds attached. Penrose couldn't resist and this time managed to squirrel away £50,000 to offset debts from the previous shop fits.
But the property company noticed a £50,000 shortfall. Luckily, after some tricky negotiating, it agreed to fill the breach so that Penrose could continue to trade.
By September 1993 the Northampton shop was up and running and exceeding its trading forecasts.
One month later, Penrose made what he feels has been his best business decision. He appointed a full-time financial controller in the form of a cricket acquaintance, Ron Chew.
The appointment represented a watershed in Hudson's fortunes. Chew's job has been to untangle the web of maladministration and sloppy book-keeping that has plagued the company from the start.
Penrose explains: "We're absolute opposites but he's brilliant. He discovered a terrible mess but he's sorting it out. We had a very good Christmas and we're about to rebank with the Bank of Scotland. The Midland has been very negative and has even charged me interest on their bank charges."
Since last autumn, Penrose's fortunes have witnessed an about turn. It has involved a rethink of priorities, a radical overhaul of costs and a more sensible commercial approach.
And the future looks distinctly promising. Penrose has just clinched a deal with book retailing giant Dillonsto introduce the Hudson's brand into a number of the chain's stores, while a "major brewery chain" has recently made an offer to buy Hudson's.
Penrose is now weighing his enviable options.
For the immediate future, he is holding fire. By next month he will have surrendered the lease on the infamous Harrogate shop and this will free him to focus on his core triangular cluster of shops in the Midlands.
With this year's expected pre-tax profits of only £20,000 on projected sales of £1m, priority is naturally being given to reducing gearing and turning the business into a leaner animal.
Looking back on his experiences, Penrose speaks like a true battle-scarred sage and says: "I've learnt more in thepast three years than they teach you in five years at Harvard Business School. So it makes me smile when little old ladies come up on a busy Satur-day and tell me thatI must be sitting ona gold mine. They don't know half the story." o
