The Caterer and hotelkeeper Interview – Simon Dobson
It's been 10 years since Delaware North made its triumphant return to the UK market with a 25-year contract at the new Wembley Stadium. MD Simon Dobson tells Janie Stamford about his plans for the business
How have Delaware North's UK operations developed in the last decade? The contract for Wembley was won in 2002 and we then added Arsenal's Emirates Stadium and Derby County's Pride Park to our portfolio, which took the UK business to about £40m in turnover.
We then moved into the travel hospitality sector, mirroring a business that Delaware North has had much success with overseas. We opened restaurants at Gatwick, Heathrow, Edinburgh International and Glasgow International airports. Across those four locations we've now got 13 operating businesses, with revenues of circa £10m.
So in 10 years we've started up the business, created an infrastructure, entered two market sectors with revenues of around £50m and now we're looking to the future.
You once said that Delaware North is not driven by market share. What does drive it? How do you ensure you don't stand still as a business? It was true then and it's true now. Because we're a privately owned business, in the hands of the same family that founded the company nearly 100 years ago, the demands on our business tend to be different from those pressed by public ownership or venture capitalist backing.
At the moment we are having discussions about what our next steps will be in Europe. Delaware North is currently in sports service and travel hospitality and we have firm intentions to expand our footprint in those sectors in the UK and potentially in mainland Europe. But not in a scattergun way.
What is your primary objective? Our goal is to create long term profitable growth in sectors that we're comfortable in. Delaware North operates in six different sectors but the common theme is hospitality. We have a very clear focus on the clients that we want to do business with and we're currently developing our thinking around potential acquisitions in the UK and Europe.
Globally we operate in a number of areas. We own and operate the TD Garden, a 20,000-seat arena in Boston, and our expertise even extends to sports ownership with our chairman owning the NHL 2011 Stanley Cup champions, the Boston Bruins. I'm not suggesting that we're going to go and buy a sports team, but what is certain is that Delaware North is fully committed to expansion in Europe and that means exciting times ahead.
Is there US investment available for expansion or does the UK business support itself? The US invested initially into both Wembley and the Emirates stadium, but all of our capital investment since then has been funded from our UK cash, which includes our airports businesses. And because our entire organisation has kept its powder dry during the last few years of economic unrest, we have resources to call upon for future expansion.
What are the limitations of stadium operations? The event schedule that we rely on our clients to provide is clearly the lifeblood of our business. Secondary income streams, such as conference and banqueting, and exhibitions, are essential, not only to provide additional revenue, but to provide continuation of employment for key talent that we require to run our matchday operations.
Consequently, particularly in a venue like Wembley that doesn't have an anchor tenant, the event calendar can be cyclical. For example, 2011 saw eight nights of Take That plus the Capital Radio Summer Ball, whereas 2010 only saw four concert events and this has a huge impact on revenues.
How do you innovate with your food offer? I believe that ensuring that our offers are contemporary and relevant to our customers' needs is essential. As an example, we have completely changed the public catering offer for Club Wembley members.
The introduction of brands and service offers brought colour, diversity of choice and a range of value propositions to our guests, while still being flexible enough to cater for the diverse audience that comes through the venue. A typical Take That fan looks pretty different to an England fan and their hospitality needs are also likely to be quite different.
Is that innovation transferable to your travel concessions? Interestingly it's the other way around. Moving into the travel business has equipped us to be more retail-focused. At the Dining Street restaurant and bar at Heathrow, we created a terrific range of sports bar-style cuisine, really fresh and vibrant, with marketing to back it up. We're now offering similar food in some of our corner bars at the Emirates and Club Wembley.
Delaware North's airport concessions have flourished in recent years. How do you plan to grow your market share in this sector? We've developed some excellent relationships with clients and prospective clients at a number of airport locations. Our challenge is to ensure that we exceed service promises and deliver financial returns to the airport authorities at our existing locations. At the same time we need to understand what the future opportunities are and to develop a brand portfolio and service concepts to fulfil them. We are in a good place in this regard. Our options in wider Europe, however, will involve acquisition and potential joint ventures as we look to gain a foothold in further territories.
What factors might prohibit you from going for an opportunity? Ultimately we've a clear vision of the business that we want to be in; what and where the growth opportunities are across a number of territories. We want to be a good partner to our client organisations and we want to associate ourselves with strong brands that reflect our existing partnerships around the world. At the end of the day, we will look to grow our business along the lines that have proven so successful for our company globally to date.
What can the UK contract catering industry learn from the US, and vice versa? Firstly, I don't consider Delaware North to be a contract caterer in the traditional sense. We are truly a hospitality management company, demonstrated by the breadth of our operations. However, focus in the US on creating opportunities to buy at the right time in the right way, in the right quality, with a strong emphasis on service and the customer are all invaluable points for the UK market. Particularly as it continues to move further towards a retail environment rather than the cost plus world that we used to live in.
Does the leisure sector have the same price pressure as others or is there more scope to be creative? I think it's generally accepted that when you go to an event or a sporting venue, pricing is going to be different to what you would expect to find on the high street. That doesn't mean that venues can forget the need for a value proposition. Our aim is to not just focus on price but to genuinely add value to our guests' experience wherever it may be.
Who are your main competitors? How do you stand out? In each of the two sectors that we're currently in, our competitor set is different. There is a mixture of large and boutique operators in the stadium environment. Interestingly, in the travel hospitality business our biggest competitors are owner-operated brands, such as Costa, Pret and the Restaurant Group.
Do you think the British tourism industry is ready? I hope so. There's no doubt that the Olympics coming to London is an opportunity for our wider economy for years to come. I do fear that the more short-sighted operators will look to make a fast buck and that in turn could damage our legacy, particularly in the hotel sector. I was especially impressed to read, in Caterer and Hotelkeeper, Patrick Dempsey's approach for his business, Premier Inn and Whitbread, which demonstrates that there are at least a few sane operators out there!
What do you see as the key economic challenges for the year ahead? From a Delaware North perspective, I think we'll see some uplift from the Olympics for our airport business, which is terrific. Our existing stadia business will suffer, particularly our corporate spending revenues, as budgets are diverted to Olympic expenditure rather than more traditional events that we are associated with. From a UK perspective, there is no doubt in my mind that austerity is yet to bite and there are tough times ahead for us all.
Simon Dobson on the London 2012 Olympic Games
Wembley Stadium is one of the host venues for the Olympics football tournament and it will be operating nine games over eight days during the Games period. Inevitably, an event on this scale in London will cause congestion particularly around staffing, but we've an excellent plan in place to ensure that our commitments are met in full.
We had a very clear strategy with regards to our approach to the Games. I'm pleased we'll be involved. We haven't however, gone for vast amounts of additional business, which leaves us in a strong position with our senior leadership focused on the future and not on one month in 2012.
I was talking recently to a very senior leader within our industry who was bemoaning how much senior management time and how many organisational resources were required to meet the commitments that they had made to London 2012. To be honest I felt that our strategy in that instance, was vindicated.
E-mail your comments to Janie Stamford here.
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