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Classic formula

04 August 2005
Classic formula

Tragus chief executive Graham Turner found himself in an enviable position in January when he was brought in by Legal & General Ventures (LGV) to run the group it had just bought for £90m. The previous owner - a management buy-in team, backed by venture capital firm ECI - had done a great job in turning around its two core brands, Café Rouge and Bella Italia (formerly Bella Pasta), bought from Whitbread in 2002, and that left him free to focus on expanding the estate.

"It's business as usual, really," says Turner. "We try to play around at the edges of what we do. We're not interested in spending lots of money on trying out new concepts. The underlying business is doing very well, and last year our like-for-likes for the year to May were up by just under 10%."

He adds: "The focus is on rollout. A huge part of what I'm doing is looking at new sites and opportunities. I think the restaurants sector is very fragmented - there's a lot of room for consolidation."

Funding in place While he expects like-for-like growth to be closer to 5% this year, following a dip in sales after the 7 July bombings, Turner has funding in place for 12 sites a year for the next three years. And he likes the idea of buying small groups of restaurants and rebranding them.
Most of the sites the company is looking at are intended for Café Rouge, the brand which Turner wants to drive up to 150 sites. While still centred on the South-east of England, the brand is developing hubs in areas such as Birmingham and is set to break into new areas such as Glasgow and Liverpool.

New sites should be about 3,500sq ft and able to deliver earnings each year of 160,000 before interest, tax, depreciation and amortisation, although a few sites in the pipeline are of more than 4,500sq ft. Bella, which tends to go into more wet-led areas and leisure parks, is also growing, albeit at a slower rate.

While Tragus has other brands such as Abbaye and Mamma Amalfi, they are very much also-rans and Turner has no plans to grow them. "If you have lots of brands, you lose focus," he says, despite being "very interested" in adding a third drive brand to the portfolio.
"I like the idea of Spanish," he says. "That would complement the existing businesses. I can foresee a time when we'll have a classic French, classic Italian and classic Spanish business."

But it's not just about expansion. Maintaining service levels is a key focus, and Turner has increased Tragus's mystery diner programme to six visits a year for all sites. On the training front, he has kept Tragus's development kitchen and training centre in Finchley, north London, and is now looking at rationalisation, creating regional training champions, and improving training materials.

Another focus is analysing the price points, which are firmly fixed in casual dining territory, with a prix fixe menu at £7.95 for two courses or £9.95 for three. Wine ranges from £11.95 (house) to £18.95 (a Chablis). "The general downturn on the high street is not affecting us," says Turner. "I see people eating out more. Eating out at a Café Rouge is not a special event. Our average spend is around
£12-£13 - a good price point."

While reluctant to play around with the menus too much, Turner aims to make his brands all-day offerings, pushing breakfast menus and adding more snacks such as ciabattas, baguettes and pastries to increase custom in the mornings and afternoons. "You've got to look at the all-day thing," he says. "It works better with families and small children, and we tend to appeal to the ‘greyer consumer'."

Promotions Innovations are confined mostly to specials and promotions, such as Café Rouge's recent snails promotion, which shifted 20,000 snails in three weeks. Turner is now looking at a frogs' legs promotion and introducing special wine lists and wines of the month.
While most of the group's marketing is done locally and by word of mouth, Turner aims to back such promotions by ramping up the group's online activity, with plans to revamp the website and engage in more targeted e-marketing campaigns. "E-mail definitely has potential for us," he says.

Tragus is also trialling handheld PCs for taking orders, especially where there is outdoor space, but has yet to switch to chip and PIN. "We think it still has a way to go," explains Turner. "The customer experience is quite impersonal, and the speed needs to improve."

While Turner readily admits that Tragus's main two brands are unfashionable, with their "classic" café and trattoria styling, they continue to be a hit with consumers. Why? "There's a tendency to overcomplicate things, but you've got to be very obvious and very clear," Turner says. "People look at our offerings and understand them immediately."

The Tragus estate

  • 82 Café Rouge
  • 64 Bella Italia
  • 9 Mamma Amalfi
  • 3 Abbaye
  • 1 Oriel
  • 1 Leadenhall Wine Bar and Tapas Bar
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