Breakthrough business – Coal Bar and Grill

With six sites dotted around the country and consistent year-on-year growth of just under 4.5%, Coal looks better placed for success than many. Neil Gerrard reports

What is it?
Coal Bar and Grill is a value-led casual dining chain with an eclectic menu, serving beef, pork, chicken, fish, salads and pasta, all centred around a bar and grill. The progress of the business has been a slow burn since it was founded in 2007, although plans are currently afoot to light a fire under the business and ramp up its expansion.
Currently Coal has six sites dotted around the country, from Bristol in the South West to Sheffield's Meadowhall shopping centre in the North. Ultimately the business is aiming for 30, 40, or even 50 sites.

Who runs it?
The company was founded by John Gater, a veteran of the restaurant trade. He started his hospitality career in hotels on the food and beverage side but his entrepreneurial spirit drew him to restaurants. Having opened and successfully sold a restaurant in Chichester, Gater became a serial restaurateur, eventually building the 16-strong Ma Potter's chain, which he sold to Tragus in 2007 for £14.15m.

What makes it different?

With the rise and rise of brands like Pizza Express, Prezzo and Ask, Gater also wagered that consumers might start to want something that offered a different style of cuisine.

A value proposition, as opposed to the use of the discount vouchers so beloved of the casual dining sector, is the other way in which Coal tries to differentiate itself. The restaurants offer a fixed price option up to 7pm in the evenings.

"We work very hard to make sure our margins come through from our hard work and not from passing on our mistakes to the customer," Gater says. He encourages his chefs and GMs to think like entrepreneurs before making buying and budgeting decisions. And as far as he is concerned, the customer's perception of the value they get from their experience is paramount. "The last thing you remember is the bill - you think it was either good value, or you don't, and I think that is where our continued growth is coming from," he says.

The guest profile
The target market for Coal is quite broad and depends on location but in general, the core market is professionals in their mid-30s to early 40s, often with families. "We get As and we get Ds, but Bs to Cs is probably where we sit," Gater says. Offering a female-friendly environment has also been important to the business' success, and that is borne out in the guest profile, which is around 60% female and 40% male.

Site requirements
Coal's first site, which it bought back from the Ma Potter's estate, was in Wimbledon. Its sits on a busy high street but crucially also benefits from having a cinema next door, which helps to drive trade throughout the day.

In general, Gater favours sites in malls and by cinemas, which help to create breakfast, lunch and dinner opportunities, seven days a week. Finding sites on suitable developments has proved very difficult throughout the recession. But now more developments are coming onstream, thanks in part to the fact that developers have started to allow restaurants to walk away from projects if it doesn't work out.

"What we are finding is that when the developer comes to us through their agents, they want you to sign heads of terms, but quite often now in these leases if the development doesn't go ahead as planned, you can walk away, so there is no contingent liability," he says.

Expansion plans
Charterhouse Leisure, the business behind Coal Bar and Grill, recently secured a £2m expansion pot to grow the brand, with plans to have 10 sites open and trading by March 2014, and another five before February 2015. Currently Gater is at the contract stage on four of the nine sites due to open, and is at heads of terms on the other five. He is cagey on the location of any of them however, such is the competition for sites in the restaurant sector.

Backers
Charterhouse Leisure is backed by private equity firms Beringea, which had also backed Ma Potter's, and Octopus. Barclays Bank also provides finance to the business, and perhaps surprisingly given the poor reputation of bankers these days, Gater is positive about the relationship. "People say funds have been difficult to get out of them and I guess understandably they've been cautious on lending, but we have a good relationship with them," he says.

Will it work?
It already seems to be. Gater is particularly proud of the fact that Coal's Cabot Circus site in Bristol regularly places fourth in terms of sales, out of the 18 restaurant businesses within the shopping centre - and that compares to national brands including Brasserie Blanc, Yo Sushi, Piccolino and Gourmet Burger. And as a whole, he claims that the group is seeing consistent year-on-year growth of just under 4.5%.

Getting beyond a handful off sites often proves to be a challenge, but with Gater's experience, as well as the presence of former La Tasca boss and 3Sixty Restaurants founder James Horler, in his role as chairman, Coal looks better placed for success than many.

The facts

• Annual turnover: (year to Feb 2013) £8.2m
• Number of sites: 6
• Number of staff per branch (full and part time): 25-28
• Year the company was founded: 2007
• Average spend per head at lunch and 18-19 at night (drinks, food, VAT 
and service): £7-8