Following seven successful years with BaxterStorey, the 2009 Contract Caterer of the Year Catey winner Noel Mahony has been rewarded with a promotion. Filling the role of chief executive vacated by Alastair Storey, he tells Janie Stamford how he plans to keep the catering giant nimble and entrepreneurial
Congratulations on the new job. Why the management restructure and how will Alastair Storey and William Baxter be involved in the company in the future? William took on a non-executive role when he became chair of Hospitality Action last year but he still works in the business. He supports me in looking after a group of clients and he also assists in some of our sales and marketing. Alastair is now chairman of the overall business and he'll clearly never stop being involved in BaxterStorey. It's the business he started and his absolute love.
It would be wrong to think the business depends on one or two people. There's a massive amount of talent that is very capable of running the business successfully. I had been running about 65% of the business over the past couple of years, so from a profile perspective clients will see little or no change.
What are your plans for BaxterStorey? It's a business I love and it's an absolute privilege to run it - one of the best jobs I could have hoped for. I want BaxterStorey to be best in class and to ensure we build a brilliant catering company. We want people to like doing business with us and we can achieve that by being nimble and entrepreneurial, by using our size and scale to good effect.
BaxterStorey's year end revenue for 2010 were £240m [parent company WSH: £362m], up 15% on the previous year.
How do you remain nimble and entrepreneurial now that BaxterStorey has grown to such a size? It's a balancing act. We keep our lines of communications simple within the business and the people who run it regionally are empowered to make decisions. Everyone on the board looks after a certain number of clients so that as a company we can get our arms around them and stay close to them. We haven't become a big hierarchical structure.
How have you achieved double-digit growth given the economic turmoil of recent years? Well-run businesses should be able to sustain growth, even during a recession. I believe ours (and I'm sure a number of others) is actually stronger because we've learnt a lot more about the market and how to adapt during those really tough economic conditions.
But then I think the key reason we won more business and were able to grow was that there was more churn in the market in terms of clients reviewing their cost base.
What lessons did you learn? We've become much more retail in our approach and fight for every pound that a customer has to spend in a staff restaurant or café. Throughout all of that we made sure we had really talented individuals that would be creative, innovative and work hard to manage a sustained period of growth. I'm really proud of that. But frankly, none of that will matter unless we continue to do so. Yesterday is history; it's what happens tomorrow that counts.
A lot of companies in times of recession look at taking cost out because they've nowhere to go. But we invested more in training in the past two years than we'd ever done previously.
Where has this investment been made? We've taken on more chefs and relaunched our barista and chef academies. We're also getting ready to launch our leadership academy.
We realised that we're good at training our frontline people but we found that we want to invest in the future leaders of the business and ensure they have the right skills to take the company forward.
Was that a risky strategy? You need an absolute core of steel and to believe in what you're doing. If you have any doubt about your proposition to the market, the temptation will always be to cut costs and de-skill.
We've just put together a five-year plan for the business and we've got new equity partners in the form of Intermediate Capital Group. They've got 20% of the business and that's reduced from our prior equity partner (MML Capital Partners, 27%). The management now owns more of the business, which is great. We have more control; more input.
Do you have plans for growth outside the UK? We've been operating in Ireland for the past five years and we're already the largest independent business there. Despite the fact that the conditions are exceptionally tough, our Ireland business reported revenues of €16m (£13.8m) last year, up 35% on the previous year.
More recently we began working with a client called Cisco and an FM company called Johnson Controls. We've now got all of Cisco's business. We retained our contracts in the UK and Ireland and added sites in Belgium, the Netherlands, Norway and France (won from Eurest, Aramark and Sodexo). Annual turnover is expected to be about €7m (£6.1m).
It has been a huge learning curve - language barrier; cultural differences. But because we're in Ireland, we're used to operating under different legislation and all our systems are euro-compliant.
How do you go about setting up new operations abroad? We're recruiting local talent but also moving some BaxterStorey people to the new sites for a period in order to instil the company DNA. It's going really well and we're enjoying it out there, but we're not going for world domination. We're testing it with this particular client; we've dipped our toe in the water.
What's BaxterStorey's involvement with the Olympic Games? We've won the contract to The Main Media Centre and the IPC. Over a 77-day period, which includes both the Olympic and Paralympic Games, we could be feeding up to 15,000 accredited press members per day. There will be restaurants, cafés, bars - just like the high street.
There's a lot of pressure to get it right. We're feeding the world's press every day; selling hospitality and general catering to the world. We looked at it and our view was that the Olympics is never going to be in the UK again in our lifetime and this was our chance to be part of it.
There are two things that make these games stand out from ones that have gone before. First of all, Locog has gone out of its way to get a lot of supply partners whereas previous Olympics have always gone for one or two providers. And secondly, supply partners have been actively encouraged to use local and regional suppliers. That's what we do day to day so it was a really nice fit.
Last year BaxterStorey acquired Restaurants at Work and Jill Bartlett. Where do these fit in? We were opportunistic. We bought them because they had gone into administration and overnight they became BaxterStorey sites. We needed the resources to mobilise 36 sites throughout the UK in the space of four hours.
But going forward, we've no acquisitions planned. We've currently got 13% of the market. Our view is we've enough scale in the UK to be able to meet the demands of any future organic growth.
BAXTERSTOREY IN 2011: THE STORY SO FAR
The independent caterer has just reported its first-quarter results and has gained £15m of new business in the first four months of this year.
"That makes us absolutely on target, which is fantastic," Mahony says. "We've taken over a big seven-site group contract with Network Rail from Charlton House and more recently a win with fund manager BlackRock, at its offices in Drapers Gardens, London, which we've taken from Compass Group's Restaurant Associates." The two contracts have a combined value of £5.8m per annum.
The firm has run a series of regional road shows, where Mahony and his team presented the values and business plans to 1,200 of BaxterStorey's senior catering managers and head chefs, and it has also launched coffee brand Cheeki coffee.
"We run promotions with it, such as ‘brown nose day' - buy your boss a coffee," Mahony says. "While it's fun, it also has all the ethical values associated with good-quality coffee."