Scoble was brought in last summer by venture capital firm Permira which, having acquired Little Chef when it bought budget hotels chain Travelodge last summer, aimed to turn the roadside restaurant chain around for “a quick float”. But it wasn’t to be.
“I don’t think they appreciated the level [to which] the business had deteriorated,” says Scoble. “At best, it’s got a load of dust over it; at worst, it’s in a bit of a troubled state. I think the real opportunity for Chef is more the three- to five-year play.” If Permira does decide to walk away from Little Chef before the job is done, then Scoble says that he will lead a management buyout (MBO).
According to him, the current ill health of the business is largely down to its previous two owners, Granada and catering giant Compass, which shared a miserly approach to capital expenditure and “stripped Little Chef to its bare essentials”.
He adds: “For the past seven or eight years, there has been no effective training in the business, no effective financial business administration, and the brand development has been a long way from what consumers have used the business for or what the brand stood for. It has become incredibly tired and badly run.”
Compounding the problem was the fact that Granada and Compass raised Little Chef’s prices “enormously”, giving rise to the chain’s reputation as a rip-off merchant and to a host of unflattering nicknames, such as “Little Thief”.
The 350-strong estate inherited by Permira also came bundled with “a real mixed bag” of retail stalls, forecourt operations, and franchises, including Wiseguy Pizza, Ritazza Coffee, Upper Crust sandwiches, Harry Ramsden’s Fish and Chips, and 111 Burger Kings.
As well as being difficult to manage, this approach to franchising was uneconomic, as the increased sales did not translate into increased profits.
Scoble began his roadside revolution by stripping out all these add-ons, with the exception of the profitable Burger King franchises. He also set about making the company a stand-alone business by disentangling it from Travelodge and strengthening the operational structure.
The central focus was recruitment and training, starting at the top. At senior management level, just one person remains of the previous team of 20, and just one of the former 25 area managers has survived.
Among the organisational changes, the number of sites each area manager looks after has been reduced from more than 22 to 12, enabling them to carry out on-site training in support of the HR function. The former Monday-to-Friday culture, which left the business effectively unmanaged at the weekends, has also been scrapped. Even Scoble does site visits on weekends.
Year-on-year, Little Chef has invested £500,000 more in its team, having poached staff from the likes of BP’s Wild Bean Caf‚, McDonald’s, Harvester, and Pret A Manger. The next priority is to recruit good-quality restaurant managers.
“We’re very honest with the guys we recruit,” Scoble says. “We don’t say this is a piece of cake. The only people who have joined us are the ones who are willing to take on hairy challenges. This isn’t for the faint and weak-hearted.”
Back in May, Scoble introduced a programme designed to take the company to the end of 2005, the point at which he believes Permira may be ready to walk away and an MBO could be on the cards. By initially focusing on the basics, Scoble aims to “professionalise” Little Chef’s restaurant operation, by reintroducing quality and raising standards, improving stock control and productivity planning, and instilling a customer-centred culture.
In readiness for the period following December 2005, Scoble’s team is working on developing the Little Chef brand of the future.
The company is testing new site designs, and trialling “grab and go” counters to help improve “patchy” customer service and ensure that delivery times come in under the 30-minute mark, against the current average of 30-45 minutes. It is also introducing new menus, offering more healthy options such as salads, and using less salt and sugar – in place of its fried-food focus and “chips with everything” approach.
The bulk of the new measures are being driven through a small number of development sites, including the flagship, new-look restaurant at Thame in Oxfordshire, where – traditionalists be warned – the tubby white chef on the logo has not been merely slimmed down but has been consigned to the scrapheap.
Two new-look, 100-plus covers restaurants will open in September and October – one on the A1 and one in Andover, Hampshire – and the company is currently identifying outlets that cannot be turned around and should close.
All in all, Scoble expects it will take at least three years to bring the brand into the 21st century.
“We could spend millions on brand marketing now, and it wouldn’t convince anyone,” he says. “We’ve got to get the basics fixed first. It really is a bottom-up-led recovery. The key thing is to drive volume and get back into double-digit growth in customer counts.”
Over the next three years, Scoble aims to swell Little Chef’s existing customer base of 21 million a year to 30 million, and to do that he concedes he will probably have to lower prices. The process has already begun. Last summer saw price cuts introduced on around 80% of the menu items, some by nearly £1. But first he has to make sure the outlets serve the customers they do get, instead of pushing customers away at key times owing to poor service standards.
But despite Scoble’s grim portrayal of the business, the reality is that road services is a growth market, and Little Chef is very profitable. The company has a virtual monopoly on A-road sites, and its 29 motorway outlets in Moto and Welcome Break service stations are extremely profitable.
Judging by the way Scoble’s face lights up when he discusses the task ahead, you know he relishes the challenge. “I’m very tenacious and I’m not one of those suited-and-booted City guys,” he says with a chuckle. “It’s a shirtsleeves approach, where we all get individually involved in the business. There’s no corporate crap. We take the business and leadership very seriously, and we lead from the front.”
Scoble is convinced that there remains “a great residual fondness” for the brand in the UK, and while the Little Chef character may be about to hang up his toque, the company is well on the road to recovery. Scoble’s main challenge now, as he’s all too aware, is to rekindle the nation’s love affair with what he calls “the last true brand icon of the British food service business”.
Tim Scoble joined Little Chef as chief executive officer in June 2003 from Moathouse Hotels UK, where he was managing director. Previously, he held a number of
different roles within Whitbread, the last one being managing director of high street pubs and bars, including the Hogshead chain. Before that, he had a number of senior financial roles in the pub and restaurant business in the UK and North America, with companies such as Grand Metropolitan.
- Little Chef is Britain’s largest roadside restaurant chain, and served 21 million people last year.
- It has more than 350 outlets, the first of which opened in Reading in 1958 as an 11-seat snack bar.
- Granada acquired the company when it took over Forte and then sold it in 2002 to Compass, which sold it to Permira last summer.
- Every year, Little Chef customers eat 13 million sausages, 15 million rashers of bacon, and 15 million eggs, washed down with 10 million cups of tea.
- Website: www.little-chef.co.uk
- Turnover: more than £100m