Peter Borg-Neal's winning formula
As Oakman Inns & Restaurants gears up to open its eighth site in September, founder and chief executive Peter Borg-Neal tells Neil Gerrard how he devised his group of gastropubs by putting into operation his personal mantra of ‘See. Think. Act.'
Peter Borg-Neal is a man who clearly values a good motto. His key fob is inscribed with ‘Remember To Be Awesome', and the walls of the Oakman Inns & Restaurants head office in the Hertfordshire market town of Tring are adorned with the nine-strong pub and restaurant company's values: ‘honest', ‘consistent', ‘respectful' and ‘commercial', to name a few.
But it is the three words fixed to the wall behind the desk in Borg-Neal's own office that perhaps guide the way he runs the business he founded in 2007 more than any others. They read: "See. Think. Act."
It's a quote from the late Tony Kay, former chairman of the National Autistic Society, of which Borg-Neal was a trustee for 15 years (his son is autistic). "He was one of the cleverest men I have ever met in my entire life," Borg- Neal says, "and he told me that those three words were the only three things in management I would ever need.
It's an approach the former Allied Domecq and Whitbread executive, who started work at the age of 16 as a cellar boy in a pub, arguably applied to launching Oakman in the first place.
Having opened pizza restaurant Forno Vivo in Tring in 2001 before selling it to Yates plc for £2.4m in 2004, Borg-Neal noticed there was an appetite in the Hertfordshire town for a place where locals could go for a restaurant meal, but also just for a drink.
"I looked at this town - a very typical, small English market town - and asked, what do people want?" Borg-Neal says.
"There were some clear differentiators. First, female domination. A lot of the women moved there in their late 20s to start a family, and very often their intention is to return to a career. So they are used to being treated well and used to London-style restaurants and bars. It occurred to me that what we should be doing is addressing the life experiences and pace of the people that live there."
And so he came up with a formula for a pub - the Akeman - that is not too slick, nor too trendy, but offers a decent restaurant with high-quality food, all-day trading and good coffee, anchored by what Borg-Neal describes as "a slight pubbiness".
Reflecting on what people really wanted has been a successful strategy and the business has grown steadily - perhaps helped by the fact that the big players have not traditionally been especially interested in the centre of market towns, favouring out-of-town sites.
"If you look at the business plan today, which is now several years old, the terminology might look a bit dated - the menu almost certainly would. But I could claim that the thinking that started 10 years ago has been followed in a very continuous fashion," says Borg-Neal.
Up until now, each site has been lightly moulded to fit its location, taking into account the town as well as the building itself, and often choosing a name that reflects its history. That is set to change slightly with the arrival of Oakman's latest site, which is due to open in St Albans. Named the Beech House, it shares the same name as the Oakman restaurant in Beaconsfield, which opened a year ago.
That name reuse reflects a new approach - one that has the makings of a brand. Rather than taking on historic properties with all the complications they entail (the Akeman was formerly a private residence and the Old Post Office in Wallingford is an old post office) Oakman set both Beech Houses in modern shop units.
Building a brand
"I was so keen to get a site in Beaconsfield but I hadn't been able to get the one I wanted. So we thought, well, what if we bring the atmosphere of an Oakman into a retail shop unit?," Borg-Neal explains. "We did, and it worked. It was going to be another one-off, but then we thought, that was fun. Developing listed buildings in market towns is really hard work. It is expensive and tortuous and planning authorities don't help."
Given that Beaconsfield and St Albans are slightly closer to London than some of the other venues, Oakman is going to experiment with an edgier approach: making it a bit more artisan with more craft beer and food. If it works, some of those ideas may feed back into the Beaconsfield site before the possible opening of a third.
Expansion is very much part of the plan for Oakman, particularly because progress so far has been steady - and probably slower than Borg-Neal would have wanted. For that, he unhesitatingly blames the business's bank, which he has previously criticised for being unsupportive.
He says: "We never missed a payment, but they basically shut up shop with us three years ago. We own net assets of around £50m and we have freehold property worth around £7m and we have secured around £1m in bank debt. It is absolutely mental."
Fortunately, the Enterprise Investment Scheme (EIS) provided an alternative source of funding, allowing the business to raise £5.5m for further expansion in late 2013. "It is what saved our bacon, really," Borg-Neal says. In fact, he thinks the EIS has had a positive effect on the hospitality sector in general and calls its expansion "probably the most momentous event in the catering industry in the last three years", adding: "When you look at the amount of money raised in the pub, restaurant and foodservice sectors through EIS, it is phenomenal. I will certainly be voting Conservative in the next election, if only for that reason."
Angels and ambassadors
He says that EIS has brought in new investors who become ambassadors for the hospitality industry as well as enabling new young operators to start their venture. "It can be a nuisance, all these talented young kids opening pubs and restaurants - you wish they would all just bugger off sometimes. But it is good for the industry and makes it cooler," he says.
Oakman's EIS financing has accelerated growth. Until recently the business was managing one site a year, but that may rise to five this financial year (April 2014 to April 2015), all within an hour-and-a-quarter drive of Tring.
The company has already geared up for that step change, with Joseph Evans, formerly financial controller of Whitbread's hotel and restaurant division, joining as finance director. Alex Ford left Greene King earlier this year to become operations director.
"We will be going at five times our previous pace, so we need a stronger team," Borg-Neal says. He envisages a two-stage process where there may be some sort of exit to allow early investors to cash in before refinancing and moving on - and he hopes the team will be there to manage the second stage.
"What I would like to do is leave the business with my managers," he says. "I think these guys can manage it better than me. I don't like having to do the audit side - I want to be out there talking to the staff and looking at new ideas, finding new sites, educating myself and educating others."
Oakman facts and stats
Annual turnover £10.3m net of VAT in 2013/14 (excluding the British Larder). Forecast for 2014/15 is £14.3m
Site EBITDA £2.3m
Best-performing site The Kings Arms, Berkhamsted (£2m net sales per year)
Staff 300 (220 full-time equivalents)
Founded 2007
Number of sites Nine (of which seven are currently trading), plus an 80% stake in the British Larder, Bromeswell, Suffolk. It also operates the management contract for the Cook & Fillet near Aylesbury in Buckinghamshire
Directors Peter Borg-Neal, chief executive; Mike Smith, chairman; Joseph Evans, finance director; Alex Ford, operations director; and non-executives Keith Wilson, David Sidwell and Mark Radley
Peter Borg-Neal on…
Closures
"I am sick of hearing all this crap about pub closures. Most of those pubs should have closed years ago. There is a stat going round that the square footage of catering outlets has gone up with the expansion of casual restaurants. Casual dining used to be a fairly grotty sector of the industry in this country and now we have Côte, Brasserie Blanc and Bill's, which are all good operations.
"It is good for the customer, but operators are not going to have it easy because they can be attacked by independents and by the pub sector, who are getting better and better. Even fast food is good now - you can get quality, healthy fast food from businesses like Abokado.
"So if you are a customer, I think you are bloody lucky and I think these are great times. Poor businesses are dying and blaming the government, the breweries - everyone except themselves."
Training
"You tend to play chicken and egg with some aspects of the business. For example, do you grow the business so that you can invest in educating your people, or do you educate your people so you can grow your business?
"I think our training is no more than on par with the average. We have got by on having great people getting inspired and engaged in what we are doing, but we don't teach them much. That's why we are developing a software-based system called Oakmanologies. Staff can go from having a craft-standard education to a degreestandard education in each strand - food, drink, service and housekeeping. The firstyear investment will be well over £50,000."
Recession
"The key effect of the recession was the credit crunch. From a consumer point of view, what happened was caution around expenditure. I would walk into one of my places and it would be packed and I would think 'wow, another good night'. Then, at midnight, my phone would start to bleep as the numbers started coming in and I would think 'What? There's £1,000 missing out of tonight's take!'
"People were deciding to have coffee and whisky at home, not that second bottle of wine, or not have the £29 wine but the £22. What I decided to do was not discount. We stayed with the quality. People had to be careful, but that didn't mean going cheaper.
"A lot of people who have discounted are having real problems getting their pricing back together. They may also have created a new genre of sophisticated voucher users and discount customers - people like students, who have got in the discount habit and retain it when they start working."
