Hugh Osmond has generated a fortune of £250m from Punch Taverns and PizzaExpress and his latest project is to reinvent the 40 Strada restaurants that he bought last year. He tells Rosalind Mullen his plans for the chain
You took time out after the flotation of Punch Taverns in 2002, but now it seems you are back with a vengeance.
Let's start off-piste. Where does Rare Bird Hotels fit in?
Rare Bird Hotels is the Swan at Streatley in Berkshire. It's not part of Sun Capital Partners [the private equity firm Osmond leads] - it's a one-off project.
The Swan at Streatley is a 45-bedroom hotel that I bought in 2012 and my partner, Lucy Potter, is the general manager. I had my eye on the hotel for more than 15 or 16 years because it is close to where we live and it has a spectacular location on the Thames. It had been unloved since its 1970s heyday, so we've done some refurbishment in a leisurely fashion - it's in a listed building, so there are complexities. We've also raised the standard of the food and drink beyond recognition and more than doubled business. We've done it out of love and a personal interest in the place.
You also own Mudlark Hotels
In 2014 we bought the 34-bedroom Newbury Manor and the 50-bedroom Great House at Sonning, both in Berkshire. We are using our experience at the Swan at Streatley to form our strategy and the first leg is now complete with the opening of Coppa Club in the Great House.
Tell us about Coppa Club
It is a concept that combines a restaurant, coffee lounge, bar, work-space, a healthy café and a general all-day hang-out under one roof, so each offer is as good individually as any rival out there. That is why we have used the word 'club' in the name, as this combination of facilities and spaces would normally only be found in one. It is sculpted to offer different things in different places, so it is not just all-day dining. It also has a fabulous location, with an outside terrace overlooking the Thames.
And you say Coppa Club is already a success?
Yes. The first few weeks have exceeded expectations and we hope the combination of offers can form a template for something new in restaurants. There is a lot more that restaurants can do to cater for what people want. It is outdated to have a pub versus a restaurant versus Starbucks. Why is PizzaExpress empty at 4pm? Why is Starbucks not serving a decent lunch? I don't want to sacrifice specialism, but to an extent it is outdated.
One of your skills seems to be the knack of bringing in the right expertise
Well, Nigel Buchanan, who started out working at Hotel du Vin, now works on the hotels side. We also use a restaurant team recruited from the best in the industry. We have been building it up to help with the makeover of Strada. For instance, our commercial director is John Metcalf from Jamie's Italian; Jackie Freeman, formerly finance director at PizzaExpress, is chief financial officer; and operations director is Tom James, previously at Roots & Bulb and Jamie's Italian.
I have personally hunted down the best chefs and directors. We have a top teamâ¦ and I seconded some of them to come up with Coppa Club.
Sun Capital bought Strada from Tragus Group last year for £37m with a view to rejuvenating and expanding it. What's the state of play?
We've been making substantial changes to the menu and, in fact, a revamp is planned for this month [October]. We have changed the suppliers and moved away from frozen and pre-processed food to ingredients with an identifiable provenance.
The strategy is to refurbish the whole estate over the next two to three years, as well as open new sites. We will start with two or three new sites a year, but that will grow to double figures. Similarly, investment in refurbishment and new openings will start at £5m a year and will increase with the rate of openings. We are taking on new units as we speak.
When you bought it, you said you wanted to make Strada an all-day hub where people "can feel comfortable hanging out". Will it become a different concept?
In the not-too-distant future, we will open a new restaurant concept. It will be Strada for the 2020s. Or maybe not a Strada. It will be a substantial evolution from Strada, because the market has changed.
Can you tell us more about how it will evolve?
The clue is in Coppa Club. If you see it, you will understand. It's clear that you can eat anywhere at any time of day. For instance, the bar is a bar, not a restaurant-bar. I'd be happy if you sat drinking at the bar all night. It's not an add-on to the restaurant, so in that way it's different from other restaurants. There are also areas where you can relax or sit with your laptop and a coffee. The Great House is a big property, so you might not be able to duplicate all that in a high street. But its vibe and what it's trying to be will give you clues about how we want to take the Strada restaurants forward.
So will the two concepts come together in some way?
We hope we can adapt high street Stradas so they can provide many of the same features. The aim is to provide a better facility to customers, rather than being a straightforward restaurant. It is, however, too early to say whether revamped Stradas would be rebranded as Coppas, or whether we would simply try to incorporate some of the club-type features to offer a new and significantly better type of experience to customers on the high street.
The ambition behind the acquisition of Strada is to create a substantial estate of up-market restaurants, but not necessarily all under the same brand. So it could be more a necklace of precious stones than a chain.
As you proved at PizzaExpress and Punch, you know how to tap into demand from a new breed of customer. Presumably, your sixth sense is at work here, too?
It is our belief that restaurants of the 2020s have to provide customers with a lot more than most restaurants do today. Why should people have to go to a coffee shop for a mid-afternoon coffee and surf on Wi-Fi? We will aim to do better coffee in more comfortable surroundings than any coffee chain. Plus, we will do a lot more than coffee, whether that is healthy juices, nibbles, snacks or a full-blown meal.
In the same way, why should customers need to go somewhere else for a drink? We will aim to have a bar that is as good and as much fun as any pub. But, again, we can do a lot more than sell drink there. It is this type of thinking that underlies the creation of Coppa Club in Sonning and it is on this philosophy that we intend to base the larger group.
So Coppa Club is being rolled out?
We hope there will be further Coppa Clubs. Our objective is to put them into hotels - although they don't have to live in a hotel. The concept is aimed at the community. The next one will be in London at a site we have identified but not yet finalised. But with that opening, we will take it further. Provided it continues to do well, we will send them into dozens of hotels and hundreds of restaurants. We are pleased with Coppa. About 80% is right. It will eventually be big, but we have to be good first and big second.
You read medicine at Oxford. Do you think being an outsider gives you a better overview of hospitality?
I don't think of myself as an outsider. I have been running bars and clubs since the age of 18. I have dabbled in other businesses, but this is my favourite. There are a lot of very good people in the industry and the talent has increased. And where else can you make money from enabling people to have fun? You are not selling a product, you are selling having a good time. And it is that intangible ingredient that makes it a brilliant industry. You have to grab the moment. It's super-exciting.
When it comes to hospitality, what do you get on your soapbox about?
There are any number of things - discounting and vouchers is one. The restaurant industry has got into a terrible muddle with it and there is no obvious endgame. It simply rewards new customers rather than creating loyal customers and it trashes the brand. It's a nightmare. Any lessons that could have been learned from the retail industry have been ignored.
What do you think about the National Living Wage?
The National Living Wage is political and counter-productive for employees. Tons of economic studies have said that it can lead to fewer jobs. The increased costs will hit the start-up entrepreneur in particular. It is not as if the restaurant industry is massively profitable, so it will inevitably lead to higher prices.
Is there a better way?
Well, I believe the way to move to higher wage economies is through full employment. That would force employers to up their game, because there would be more competition for staff. It would help more start-ups, which in turn would create more jobs. I also think it is a good thing to have a starter wage and then get people on the career ladder. Then, as they improve, they get better pay. But with the National Living Wage, everyone will have to reduce the number of people they employ.
Finding good staff is a perennial problem for the industry. One of the advantages you gave for expanding Strada was being able to offer promotional opportunities, but where will you get the rest of the staff?
Poaching staff is another of my bugbears. You need to build your own training and team-building systems. I want to recruit unskilled people and train them from scratch, then offer them career progression. We can't all keep poaching from each other.
What is your last word?
I want to build an enduring restaurant concept for the 2020s. People's tastes are a moving target - just look at the way people use phones and laptops - and we need to look ahead. I want a 2020 restaurant.
Strada facts and figures
Number of restaurants 40
Turnover About £45m a year
The strategy To refurbish the whole Strada estate over the next two to three years as well as open new sites. Initially, two to three new sites per year are planned, but this is expected to grow to double figures
Investments About £5m a year, which will increase as the rate of openings expands
The ambition behind the acquisition To create a substantial estate of up-market restaurants - not necessarily all under the same brand, so "more a necklace of precious stones than a chain"
Hugh Osmond's CV
Born March 1962
Education Read Medicine at Merton College, Oxford
Pre-1992 ran a small private group of pubs, restaurants and bars
1993 Co-led the £18m acquisition and flotation of PizzaExpress, grew it into a group with more than 200 restaurants and remained a director for seven years. During his tenure, annual losses of £0.5m were turned into profits of £38m
1994 Bought My Kinda Town restaurant group
1997 Founded Punch Group, grew it into largest UK pub group with more than 7,000 pubs, and remained executive chairman and major shareholder until its flotation in
2001 with an enterprise value of £3.5b
2001 Founded London-based private equity firm Sun Capital Partners with a remit to acquire interesting businesses
2005 Created Pearl Group, now publicly listed Phoenix Group plc. Recent hotel acquisitions include the Swan at Streatley in 2012 (off a guide price of £6m), the Great House Sonning (for about £5m) in 2014 and Newbury Manor Hotel in 2014
2014 Acquired restaurant group Strada for £37m from Tragus Group following its restructuring
2015 Launches Coppa Club, a new restaurant in Sonning, West Berkshire
Family Lives in Oxfordshire with long-term partner Lucy and their three children
Interests Skiing, surfing, motorbikes and most racket sports