While it’s perhaps a few perms short of being a sea of blue rinse, there is nobody under 60 years of age in the dining room of Loch Fyne’s St Albans branch.
“I’m often the youngest person in the restaurant, which is lovely for me,” laughs director and general manager Liz Williams. “At town-centre and city-centre sites it’s less pronounced, but affluent retirees – or silver surfers as I like to call them – are our key customers, there’s no doubt about that.”
The Greene King-owned chain is one of a growing number of operators chasing this lucrative demographic, not least former managing director Mark Derry, who now oversees Brasserie Blanc which has a unit next door. According to UK population projections, the number of people aged 15 to 24 will fall 8.8% by 2020, while the number of people aged 65 and upwards will grow by 23.3%.
Analyst Allegra Foodservice has used this data to predict potentially game changing shifts in the sector with the number of meals eaten by over 65s set to increase by a staggering 65% over the next five years or so. Trendy and ‘young’ brands beware; the future’s grey.
Limited expansion
It’s 3.30pm and the large dining room is quiet with half a dozen tables finishing off bottles of wine and picking at desserts. With Greene King unwilling to talk figures for individual brands, it’s tricky to tell if the UK’s only truly-national seafood chain is buoyant or floundering in the water.
Last year Loch Fyne reported a significant decline in pre-tax profits from £1.36m to £414,800 for the year to 29 April 2012. However, Williams’ choice of location for Loch Fyne’s AGM suggests that things are picking up, with the group’s senior team and all branch general managers and head chefs shipped to Champagne as a reward for hitting their targets.
Its parent company is certainly doing well. The pub and brewing giant reported a 9.4% rise in pre-tax profits to £173m earlier this year and is planning to open around 50 new sites this year, but this growth will be focused on Greene King’s lower end brands including Hungry Horse, which offers two meals for as little as £8.49.
Williams is surprisingly candid about the 41-strong group’s expansion prospects. “We’re not looking for sites right now,” she says. “We wouldn’t rule it out, but at the moment we’re happy with what we’ve got. For many of our customers we’re a special occasions-only establishment, our visit frequency just isn’t that high. As such the sky is not the limit for us – we’re never going to have 100 restaurants in the UK.”
Her comments highlight the inherent challenges of running a seafood-focused business in the branded space. With ice counters in the dining room packed with oysters and lobsters and Champagne buckets stacked at the bar, it’s inevitable that Loch Fyne is going to be thought of as a pricey proposition by the majority of the dining public.
Loch Fyne
The Loch Fyne restaurant business started life in 1988 when Loch Fyne Oysters opened an oyster bar on the banks of its loch near Cairndow in south-west Scotland. Branches in Nottingham and Peterborough followed, and in 1998 the seafood producer teamed up with Mark Derry and Ian Glyn, who founded Loch Fyne Restaurants as a separately owned business, effectively licensing the name from Loch Fyne Oysters.
The deal comes with a number of conditions, not least that the group must source a number of its key seafood items – including oysters, mussels and salmon – from its namesake.
Williams studied hotel and restaurant management at Manchester University but left early after signing up for management training at Pizza Hut.
“My dad wasn’t too pleased with that decision, in fact he said I’d be a waitress the rest of my life,” says Williams, who ended up staying with the then Whitbread-owned chain for over a decade. “As a woman in my 20s I wasn’t the target market, but I loved it there. The culture was great.”
Despite her father’s reservations Williams worked her way up through the business, taking a number of nonfrontline roles including quality control, supply chain management and marketing before moving back into senior ops roles.
In 2007, she was headhunted by Clapham House to run The Real Greek, which then operated six restaurants in and around London. In 2010, Capricorn Ventures (now Yellowwoods) purchased Clapham House. Knowing the Nando’s owner was likely to sell off The Real Greek, Williams briefly considered a management buyout before taking the top job at Loch Fyne in 2011.
Her joining of the group came three years after Loch Fyne was purchased by pub and brewing giant Greene King for £68m as part of its effort to counteract the effects of the 2007 smoking ban by moving further into the world of food. With experience of both a large restaurant business driven by structure and process and of a much smaller entrepreneurial outfit, Williams was (and indeed still is) well-placed to lead the group, but it was tough going at first.
“The business had undergone a lot of change since being taken over by Greene King. A number of head office departments had been axed, as payroll, purchasing and a number of other functions were centralised to Bury St Edmunds [the Suffolk town in which Greene King is based],” she recalls. “Both the senior ops team and branch teams were worried about the future and therefore disengaged and demotivated.”
Williams went in gently, talking to staff at all levels about their concerns and how they thought the business could best move forward. “My background helps. I started at the very bottom so I know what the guys on the ground go through every day. I try and listen to everyone and see things from their perspective,” she says.
Team engagement stats have now leapt from 40% to 80%, meaning that four out of five branch staff are motivated and happy at work. That’s a similar level to Pret A Manger, which is widely-considered the most effective staff motivator in the branded sector.
Premium group
Detailed consumer research commissioned last year showed Loch Fyne – which has a spend per head of £21 – is perceived as one of the UK’s most premium groups.
“Fish is an expensive product so there isn’t a huge amount we can do to lower the price point. The key way in which we can provide customers with a high value experience is by making sure that the service and environment is of high quality,” says Williams, who has recently introduced some subtle but important stylistic tweaks including the scrapping of branded T-shirts in favour of crisp white shirts and the introduction of high-quality branded crockery.
Some branches – including two of Loch Fyne’s busiest sites in London’s Covent Garden and Cambridge – have also been refurbished by high-profile design firm Martin Brudnizki Design Studio.
“We want the estate to remain eclectic. We have some great sites in interesting buildings but they’re all very different,” she says. “For example our Covent Garden site is big on white tiles and has the look and feel of a classic London oyster bar, whereas this location has a warmer feel.”
Williams is also frank about the strain the genre can put on margins. Seafood is an expensive and highly perishable commodity that can seriously impact on profitability. Five years ago, Fish Works – at the time Loch Fyne’s only real branded competitor – fell into administration, underscoring the fragility of the seafood restaurant model.
In the branded sector at least, expansion is driven by fish and chip-focused businesses, including Kerbisher & Malt and Des MacDonald’s The Fish & Chip Shop – both based in London – and Harry Ramsden’s, which is looking to reinvigorate and potentially add to its estate following a tricky spell.
“Our cost base is high and practically every item on the menu is fish, which makes menu engineering [the common practice of lowering the menu price of more premium items by increasing gross margin on items that are cheaper to produce] tricky,” she says.
Discounting activity
Despite margin concerns, light-to medium discounting activity is accepted by both Williams and Greene King chief executive Rooney Anand as an entirely necessary way to drive new business and reward loyalty.
“Younger people in particular have a tendency to shop around online for the best promotional deal so we need to have a presence. We’re also trying to be more targeted by working with third parties such as O2 and Aviva insurance,” says Williams, who currently offers new customers 25% off the food bill at non-peak times. Loch Fyne also has a longstanding partnership with the Gourmet Society, offering the discount scheme’s members 25% off the total bill.
But the key mechanic to getting bums on seats is Loch Fyne’s £10.50 set menu. “Two courses and a side dish for just over a tenner is incredible value, especially as we offer whole fish such as plaice.”
To achieve such an accessible price recently recruited executive head chef Alessandro Cristiano makes use of the Skippers Catch scheme which sees bycatch – non-target species that often get thrown back into the water dead or dying – finding its way on to restaurant menus. “We get in the likes of dab and slip sole. As part of the initiative we know the name of the boat and the captain, which helps reinforce our sourcing credentials,” says Williams.
Loch Fyne gets the majority of its seafood from Scotland but it will source from the rest of Britain if certain stocks are unavailable. Sustainability is a key part of the brand’s identity and Williams works closely with Loch Fyne Oysters and national fish supplier M&J Seafood to ensure that Loch Fyne does not have a negative impact on the marine environment.
Another key Williams initiative is the introduction of a customisable main course section dubbed The Fish Bar. Customers choose a fish (the current selection includes farmed salmon, Anglesey seabass and wild hake), a cooking method (grilled, pan-fried, or steamed), a sauce and sides.
It’s been a huge hit with customers and has even usurped fish and chips as the group’s bestselling dish – much to the relief of Williams, who says this flexible mode of eating is particularly popular with her beloved silver surfers.