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Eat Out with... David Page
12/02/2016 - 07:03
David Page ran a number of Pizza Express franchises before floating it in 1993 and buying it outright in 1996. It went from 25 outlets to over 300, and the share price grew 23-fold. He then become chairman of Clapham House Group before setting up his current company Fulham Shore in 2012. He talks with Andrew Pring.
EO: People know a lot about your success in growing Pizza Express in the Nineties, but how did you get started in the business when you’d trained to be a teacher?
DP: When I was a student, I worked at the site in Wimbledon, doing the washing up to start with. The owner was a chap called Hugh Godney. It was the 8th PE site. He’d studied maths at London University and taught me all about cash flow. But I only learnt what a balance sheet was when we floated in 1993!
How did you get to know Hugh Osmond and Luke Johnson, who were with you in those glory days at Pizza Express?
After deciding not to continue in teaching, I’d got more closely involved with the restaurant business, and by the mid to late 1980s I was running a group of 14 franchised Pizza Expresses. I got to know Hugh Osmond and Luke Johnson in the late 1980s when I placed an ad in the FT to sell my franchise. They replied to that, and although nothing came of it then, we kept in touch and when Pizza Express founder Peter Boizot decided to sell up, we bought it together and ran it between 1993 and 1998.
Ok, that was then – let’s go to now: Franco Manca, your pizza operation, is getting rave reviews, and we’re having lunch at the Tottenham Court Road site. One of the things that strike me, apart from how busy and buzzy it is, is also how small it is. Don’t you want larger sites than this?
To answer that, let me explain about Franco Manca. We’re a high volume, low price operation, with no starters and very few puddings. So we don’t need big space back stage for our kitchen and prep work – this one has 1,300sqft. Small, yes, but we don’t want to go for a big store with 200 seats, which can easily not be full enough to create any atmosphere on quieter days of the week. This is fine: we’ve just signed a new five-year deal - £155,000 pa. We serve about 3,000 people a week here, and take about £1 million a year. The rent’s about 6% here. We normally aim for 4-4.5%.
Franco Manca is obviously a pizza restaurant. Do you see Pizza Express as a competitor?
Guiseppe Mascoli, who started Franco Manca and is co-owner, is a Neapolitan pizza specialist – he really doesn’t see Pizza Express as a benchmark! We don’t think we should measure ourselves against them but rather against pizzas from Naples.
Also, Pizza Express pizzas are 10-15% smaller, and 30% pricier. Our top price is below their lowest price. Our average spend is £8.50, including a drink. But we don’t see our prices as ‘low’ – we see them as the correct prices.
What do you think of the way Pizza Express has developed since your time there?
It’s now a mass market brand. It’s another one of the big names. It’s so depressing when you go round the UK these days – you get the same names everywhere – Nando’s, Pret, Prezzo, and Pizza Express. But the public seem to love it.
As soon as you get to a certain size, it’s very difficult to retain the freshness and creativity. I’d say the optimum is about 80 sites. Up to then, you can have fun. But not beyond that. At Pizza Express, we were opening in places I’d never been to. You don’t take so much care of the operation – you can’t. And you have to put the prices up. You’re now selling the public a commodity.
Will you be rolling out many restaurants in the next few years?
We’ll be opening 30-40 new restaurants in the next five years – six or seven Franco Mancas a year. We don’t call it a ‘roll out’? A roll out is anathema to us – we don’t want to rush anything out. We’ve enough sites for the next year – almost entirely in London, within six stops on the tube from central London.
London is where it’s at, it’s where all the ideas are happening. Provincial cities just aren’t the same. London is an amalgam of 30-40 villages – Birmingham, four. There’s over 120 cuisines in London. So many people are trying here - it’s Dick Whittington all over again.
Isn’t there a danger of over supply?
Yes, there might be some of that – there are so many operators around but they havn’t all got it right. The recession made all the new, smaller operators very conscious of the price points – not so at the established chains, and they’re slowly losing customers.
We bumped into you at Croydon recently – a big retail development, Ruskin Square, where I believe you’ll be opening a site.
Croydon has massive potential. It lost its way 25 years ago, and it’s got an enormous population who eat anywhere but Croydon. Put something decent there and they’ll come. We’ll put a couple of new brands there, maybe a steak operation.
What kind of investment returns are you after?
We look for a 30% return on capital. So if we invest, for example, £750,000, we aim to make £250,000. We used to get a 33% return at Pizza Express. Compare that to the 7-8% yield in the pub trade, and I don’t know why they bother. A pub chairman said to me once, “David, it’s a different business’ Bloody right, it is, I told him. Yet they’re in the same space as restaurants – it doesn’t make sense.
Tipping has been all over the national press recently, and forced a number of big chains to alter their policy. How do you handle it?
I’ve always made sure the tips went to the staff. That was one of the reasons we Pizza Express was so successful. Tips should always go direct to staff. It worked very well for us because it meant that all the best staff wanted to work for Pizza Express.
All our staff at Franco Manca and the Real Greek are shareholders. For our non-PLC companies, where staff can’t trade shares, we give cash incentives. I’ve always believed that staff incentivisation is crucial – why otherwise go to work? I remember one waiter at Pizza Express Bond Street became a millionaire when he invested £30,000 at the time of the flotation.
That was the policy when I was there, but they changed it when new owners took over in 2006.
What do think of the introduction of the Living Wage?
It will put prices up at restaurants, but as one of the lowest price restaurant groups, we welcome it.
Any new ideas in the Fulham Shore pipeline?
I’ve got about 10 new brands in my head, but we’re currently developing three new ideas – a steak concept, a Japanese Ramen (noodle soup) idea, and a smaller version of the Real Greek for a friend out in Crete.
You’ve had great success, but have you had any failures?
Well, I turned down Café Rouge when it had six sites…
I notice that, unlike many other restaurants, you don’t play music here – why’s that?
We prefer people talking.
What about social media – are you in to that?
We don’t need social media – so often it just boils down to a restaurant manager posting pictures on Facebook of them all lashed at a staff day out - and we’ve not got a PR agency.
And the thing is, we don’t have to do it – customers are doing it for us.
I’m sure lots of small restaurant owners have seen what you’re doing at Fulham Shore, acting as a kind of incubator, for exciting new concepts, and they all want to meet you. How do you handle all the interest that comes your way from people who’d like you to invest in them and help them grow?
I try to see everybody – but some people are too naïve to talk with properly. Some don’t understand what a food margin is. You can see why they’re popular with the public – but they’re giving the food away and not making any money. Or they want an average spend of £30 per head – I’m just not interested. And if they’re not prepared to work 120 hours a week, not interested either. There’s nothing casual about casual dining – it’s bloody hard work.
How can you tell if they’re hard workers?
They’ll look bloody tired!