The majority of fine dining chefs avoid talking numbers with journalists. Most would rather wax lyrical about seasonal produce, the importance of local suppliers and their passion for 18th century pigeon recipes. But, in contrast, it’s actually difficult to get Alan Murchison – the successful chef turned CEO who helms the 10 In 8 Fine Dining Group – to stop talking about EBITDA, financial incentives and his four fine dining restaurant’s daily flash reports.
Don’t get us wrong: Murchison is often in whites and effectively combines the roles of group executive chef and chief executive. A love for the product remains, but (rightly) numbers come first. “Great chefs are invariably second-class businessmen,” says the fast-talking and charismatic Scotsman.“I’m not saying that flippantly, there’s a history of brilliant cooks that shouldn’t be let near the balance sheet or cheque book.”
While there are a fair few P&L-savvy chef patrons running profitable Michelin-starred restaurants that would take umbrage at this statement, Murchison – the erstwhile director of Raymond Blanc’s cook school – certainly has a point. Brilliant craftsman are not necessarily brilliant entrepreneurs: many a restaurant has closed its doors because its chef patron lacks the time or inclination to keep on top of the numbers.
“Profitability is not a dirty word,” he continues. “Some chefs are scared to talk to staff about making money, I think it’s an essential part of training. Every morning I can tell you what our restaurants did the night before, the average spend and their food costs.”
Fine dining expansion
His 10 In 8 company – so called because of its goal to operate 10 Michelin star restaurants within eight years – brings big business mentality to boutique fine dining. The group was set up early last year when Murchison, already the operator of Michelin-starred restaurants L’Ortolan in Reading and Ludlow’s La Bécasse – took on a third site, Paris House, in Bedfordshire.
Inevitably, a few eyebrows were raised at the boldness of this stated ambition. Why does a chef need 10 Michelin-starred restaurants? Is now is that a single star will normally add 20-30 per cent to turnover and that the restaurant will barely need to do any marketing or PR – so the star is an integral part of the business plan.
The project is actually going very well. Paris House won a star 10 months after opening and few would bet against the group’s latest acquisition – Angelique, formerly John Burton Race’s The New Angel, in Dartmouth – following suit next month when the 2012 Michelin Guide is published. Group turnover for this financial year will be between £3.5m and £4m off around 1,000 covers a week.
Business partner
Murchison is currently looking at a number of options and an announcement of a fifth site is imminent. Fine dining groups rarely, if ever, expand at this pace successfully. But 10 In 8 is bucking the historical trend. The secret weapon? A chap called Richard Percy who knows absolutely nothing about the restaurant business.
“I knew I only had the business acumen to develop this group to a few sites,” Murchison recalls. “I needed someone that understood how to build a business who wasn’t wrapped up in the product. I got lucky with La Bécasse – it’s bloody miles away and I had no business plan and no money. It seemed like a good idea at the time but in hindsight it was a foolish thing to do, that’s why I need someone like Richard on board.”
The site selection process at 10 In 8 has since been refined. Murchison may have snapped up La Bécasse “on a whim”, but the group’s latest acquisitions – though clearly plum sites – have been subject to an emotionless cost-analysis process that would make Simon Cowell proud.
“Richard is not sentimental about restaurants. I want it to be the best it can be, he wants it to be financially viable,” says Murchison. “We have regular reality checks: do we need to borrow money? Is the premium too high? What’s the capital expenditure going to be? Will we get a return on the investment? I also now know there’s no point in looking at a 30-cover restaurant that’s £100k a year rent. It simply won’t work.”
Business strategy
This chalk and cheese duo has developed a stripped-down approach to opening and running relatively small, top-flight restaurants. First, the talent is identified. A key motivation for Murchison in setting up the company was to retain the people he’d trained. Second comes the restaurant: small (about 40 covers) and relatively cheap to rent.
“Obviously, it’s much easier to fill a small restaurant and your running costs will be significantly lower,” he explains. “We basically assume the restaurant will be pretty much full all the time which makes controlling costs easier.”
Set-up costs are minimal. The restaurants look smart but 10 In 8 doesn’t throw money at interiors. Similarly, Murchison doesn’t spend a fortune back
of house; most of the kitchen equipment for Paris House was purchased on eBay.
Staff numbers are low to begin with, five front of house and five in the back. After the restaurant proves itself as a business – the loss-making Paris
House, for example, was back in profit after six weeks – staff numbers can increase slightly.
When a chef wins a star they get full budgetary responsibility. “It’s in their hands then,” says Murchison. “Chefs can buy water baths and Villeroy & Boch glassware, they can even decide how much to pay themselves. But they live and die by their balance sheets.”
Just as in the corporate sector, Murchison compares his restaurants on key performance indicators including P&Ls, food costs and staff costs. “Chefs are all raving ego maniacs, they want to be the best. I get my guys competing on food costs, training costs, recruitment costs – it’s a healthy culture to promote.”
Site selection
Murchison and team have so far adopted a hermit crab approach to site selection. Every site has previously traded as a fine dining restaurant, with all four having already held a star at some point in their history. But this, says Murchison, is largely a coincidence. “I’d consider anything - a new build, converting a pub. We could even operate in a hotel.”
When the company was first set up, Murchison looked at sites in Edinburgh, but the acquisition strategy has since been revised. The group will target locations near major hubs that are also in striking distance of London. The capital itself has not been ruled out, but whether the low rent-dependent model could be made to work in London remains to be seen.
10 In 8’s sites in more local and seasonal areas (Ludow and Dartmouth) are performing well, but Murchison gives the impression that he has
identified greater potential in areas where there is a strong corporate customer base. Will Holland – now head chef at La Bécasse, in Ludlow – was essentially the guinea pig for the 10 In 8 project. Identified as a superb talent while working as head chef at L’Ortolan, Murchison realised there was nowhere left for him to go within the business.
“It’s a common problem in top-end restaurants,” he says. “Brilliant staff that you’ve nurtured for years leave you and give those skills to someone else because there’s no scope for development.”
“Alternatively, they go out on their own and go bust because they don’t have enough capital behind them or haven’t had experience running a business. The big corporate chains have a clearly outlined career progression – there’s always somewhere to go. We don’t have that in the fine dining sector.”
Under Murchison’s guidance, Holland opened La Bécasse (on the former site of Claude Bosi’s Hibiscus) in 2007. The restaurant has gone from strength to strength: not only has Holland – barely 30 – won and retained the all-important Michelin star, he’s also frequently cited as one of the most promising young chefs in the country.
Holland – and indeed Murchison’s other chefs – are kept engaged and motivated through ownership. All have high levels of autonomy within the business: they write the menus, train the staff and make purchasing decisions.
“Key-staff need to buy into the business, in fact they need to feel like it’s their project,” says Murchison. “I give Will intellectual ownership of La Bécasse and in exchange I get commitment."