The Caterer Interview – Niall Howard
Having been brought in 18 months ago by Hakkasan's Abu Dhabi investors, chief executive Niall Howard has successfully opened a second UK site and has plans for a worldwide roll out. He tells James Stagg where the new sites will be and why the migration cap has stymied investment in the UK
You've been with Hakkasan for 18 months but it's your first post in the industry. Where were you prior to this appointment? I spent almost 15 years in financial services as an executive, was almost 15 years in oil and gas, have been a director of William Grant and Sons and ran my own consultancy business.
What's your relationship with hospitality? None. Although I did train as a demi chef de rang in Baden Baden, Germany. This job came through a contact that I knew 30 years ago in the oil industry who was working for the people who bought Hakkasan in Abu Dhabi.
How have you found it compared to other industries you've worked in? It's actually pretty straightforward but probably more enjoyable. It sounds bit hackneyed but you just need to concentrate on the people. If you can manage people then it's not too difficult.
What is the size of the business now? In London we have two Hakkasans and one Yauatcha, along with a Hakkasan in Emirates Palace in Abu Dhabi and another in Miami. They all have the cage, blue glass and long bar so you know you're in a Hakkasan but they also have their own local characteristics.
There's no need for them all to be identical but they have to have core attributes. The menus start off the same but are adapted for local customs and produce.
What is the turnover of the group? The turnover is still in the region of £15m but growing. At the moment the UK business is the bulk of the group as the two overseas ventures are management agreements so we don't recognise the revenues there, just the revenues we make from the agreements. In the future that will change, though.
How do you manage that in terms of protecting your brand? It's all about the partner. As a company we may have made some mistakes in the past but we've learnt from that and we're now very careful with our partners. Most of our growth going forward is going to be more wholly owned business where we put up the capital expenditure and run them ourselves. There are a number of exciting developments on that front.
Would you consider another Hakkasan in the UK? There will never be another Hakkasan in the UK. The formula and investment is such that it can only survive in mega-cities where there are what I call global residents. The average spend is too much.
Did you consider it a gamble opening a second Hakkasan in London? I personally didn't but others did. Although Hanway Place benefits from its quirky location a lot of people don't go there because of that. London is a hub: a culinary centre and travel centre. Many global residents live here and they use Knightsbridge and Mayfair. Even the Kensington and Chelsea type of Londoner doesn't go across Regent Street. We haven't seen as much run off in the original restaurant as we had anticipated.
What is the future for the brand? The future of the brand is international, global even. There's a strategy of having four global hubs: far east, middle east, Europe and the Americas. The sort of cities where global residents live in.
There's obviously plenty of cash available for investment. The Abu Dhabi nation is successful. There's a lot of oil and gas but there is a need to diversify their investment. So, yes, there is cash.
So what are the plans for expansion? We're opening in Mumbai in April and Dubai in September, New York in November and then hopefully the other four will be Paris, Shanghai, Las Vegas and Los Angeles.
The phase after that may be smaller Hakkasan's in next tier cities such as Moscow. So that brand is out of the blocks and motoring.
We should be opening a Yauatcha in Mumbai in the summer, and possibly another in Abu Dhabi around then. As I said, the UK has been stymied a bit but we may continue with one site.
We're also looking to start a third brand. In my mind I'd like to do a Wagamama- or Busaba-style place. There's a lot of money in it if you get it right.
How large is the investment and when do you expect to see a return? It's up to £100m investment. Most of the projects are longer than UK projects in terms of return on investment. Five years is acceptable to us because we're all about a long-term sustainable business rather than building something up to sell. The Arab investors want a global sized F&B division.
How will you find the necessary skilled staff for these operations? One of the reasons we want to do Shanghai is to make that an academy to train Chinese chefs. Hopefully we'll open there early next year. We've identified a site there that should be amazing.
Do you see a problem ahead with the migration cap? Huge. Not recognising chefs as particularly skilled will hit us hard. It will stop us investing in the UK and prevent many jobs being created.
I wrote to the prime minister, Vince Cable and the Mayor of London to point out that the current rules will stifle inward investment. It hurts me but I can't do anything about it other than point it out and hope people see sense.
Roughly for every visa we get we can create 100 jobs. Every skilled Chinese chef we bring in can have that great an effect. We can't just create the standards in the UK from the people here so we have to bring in the main Chinese chefs: head chefs, wok chefs and dim sum chefs. We don't need many; then everyone else can be British. But we can't open a restaurant without those skills.
Has it prevented any further UK investment? We were planning more Yauatcha sites but if I can't get visas I can't do it. That would have meant thousands of jobs to the UK. We actually had pitched for another site in the UK and were going to work on the Yauatcha brand but that's been put on hold now.
We were planning multiple sites outside London. For the sake of 10 visas we could have created 1,000 jobs.
The government says that you should train local chefs in the right skills. Isn't this possible? The truth is you can't. If it was easy to train people up we'd do it. Why pay for expensive ex-pats when we can get it cheaper locally? They do not have the skills in putting hand-made dim sum together and can't handle the heavy woks and their intricacies.
How about VAT. Has the rise had an effect? I don't sweat over that. We have to take equal pain. We didn't up our prices when the
VAT rise came. We kept our prices compet-itive and continue to earn industry standard margins.
TIPS FOR ROLLING OUT A BRAND
â- Every individual has a dream - and you don't want people not to have dreams - but I hate seeing people putting their money and effort into something that's never going to work. A lot of people are so passionate about their own product that they close their eyes to reality.
â- Make sure your market is there before you spend any money because it's such a tough business.
HOWARD'S MANAGEMENT PHILOSOPHY
â- It was an advantage maybe not to come from the industry. I came in without any preconceptions so I had to listen. I thought about what made sense, who were the right people to back and who wouldn't make it. Fortunately, I turned the company around from a £6.5m loss to profit a year later.
â- I ask my people to measure themselves on three things: do they feel valued, are they proud of where they work and are they enjoying themselves. If they can't tick those boxes they've got a problem and perhaps they shouldn't be here.
â- After many years my management style is more inclusive than perhaps it was when I was younger. I like to think that I help people bring ideas to the table, develop them and implement them. Many people say that they love working in the company now and that it's better than it ever was, so that's quite satisfying.
