Business Profile: Benugo
One day, the co-founder of café and restaurant chain Benugo was enjoying some well-earned time off in the sunshine, the next he was receiving invective-filled tweets, such was the backlash towards his company’s proposals to take on the Parliament Hill café, which had been run by the D’Auria family for the past 33 years.
“I couldn’t look at my phone. I was getting messages of complete hatred on Twitter and Facebook,” he recalls. “Somebody sent me an email saying I was pure evil. I thought that was reserved for the likes of Harold Shipman and Adolf Hitler.”
Warner replied listing 10 things Benugo does – such as supporting homeless people, buying organic milk, using local suppliers, supporting local community groups, employing 2,000 people, and asked the sender what was pure evil about this. “He never replied.”
The Benugo boss eventually backed away from the plan, despite winning the tender fairly, following a petition signed by thousands of people, some famous, some local and some less so. “Alastair Campbell signed it, as did someone from Buenos Aires and the Amalfi Coast,” he says. “People were picketing outside our stores. We legitimately won the tender, not because we offered more money than anyone else as people thought. A lot of very nasty things were said about us that were untrue. I’m not power crazy. I don’t want to upset anyone.”
Casually dressed and with a constant smile and very relaxed manner, Warner doesn’t have the demeanour of someone who wants to ruffle feathers. In fact, he admits to being pretty shaken up by the event. “It taught me a few things,” he says with a wry smile as we sit in the upstairs dining room of the Cellarium Café & Terrace, a Benugo restaurant set within the 14th-century store house of Westminster Abbey. “Be bloody careful what you pitch for and listen to public opinion. I’ve always thought of Benugo as being a kind business. But this lot didn’t.”
Charity begins at home
To the outsider, the Hampstead Heath episode looks like a victory for the small guy with the big chain sent packing with its tail between its legs. And indeed it was. Yet Benugo is not the thoughtless behemoth out to crush the opposition that the incident would have many believe. Far from it, in fact. You only need look at the work it does with homeless charity The House of St Barnabas to see a different side to it.
Benugo runs the commercial side of the not-for-profit members’ club, located on Soho’s Greek Street, whose aim to get homeless people in London into work. It runs its F&B and front of house and has helped build a club that now has 2,600 paid-up members (annual fee is £600 a year, £300 for under-30s), with all profits going to the charity. What’s more, many of those who benefit from the charity’s work end up working in one of Benugo’s restaurants or receiving training there.
“It’s not always about giving money – although we do that too – it’s about being involved,” says Warner.
Operating a diverse portfolio
Running a Soho private members’ club might seem strange for a café chain but considered in the context of the business it is just another string to its considerable bow. Benugo operates across six strands
– retail, namely its high street cafés; business and industry (B&I), its cafés on company premises; parks; museums; restaurants; and events, with each area having its own operations director.
Despite its small high street presence – it runs seven stand-alone cafés and an espresso bar with six others located in transport hubs – it operates a further 18 restaurants and 20 cafés in public spaces. Add to this its cafés in offices and its portfolio sits around the 80 mark.
“A lot of people think Benugo is a very small business because of its high street presence and I quite like that,” says Warner. “I’d love to tell you there was some amazing strategy about how we created the company and that we had great ambitions to be in all these different places, but it’s not true.”
Instead, Benugo started in 1998 “with zero strategy” at the time when Pret a Manger was starting to roll out. Launched with Warner’s chef brother Hugo (Benugo is a portmanteau of their first names) the brothers decided to do a deli version of Pret, serving good-quality coffee and sandwiches that could be customised.
While Warner admits this approach wasn’t without its complications, he didn’t go into it completely blind having been one of the original franchisees of Pret. Nevertheless, after having opened only three cafés, the business took an unexpected and pivotal change of tack when restaurant critic Nick Lander suggested it tender for the café contract at the V&A Museum. It did, and won, and the rest is history.
“That was the defining moment in the stretch of Benugo into other disciplines,” he says. “It broadened our view of what could be done.”
The V&A café wasn’t markedly different to what Benugo was already doing but it helped raise the company’s profile and move it into competition with the big contract caterers. It also spurred Benugo to enter into the B&I sector, first going into the offices of Lehman Brothers and later the London headquarters of Deloitte, PricewaterhouseCoopers and beyond.
This then led to the company opening its first restaurant after being asked by the British Film Institute on the Southbank to open a coffee house. “We told them we could do better than that and they said if we wanted to open a nice restaurant we had to pay for it and do it, so we did.” The result was Benugo Bar & Kitchen (BBK), which opened in 2006.
A public-spirited approach
Benugo now operates numerous cafés and restaurants in some of London’s most iconic locations and it is this privileged position that gives the company focus. “One of our principles is we don’t want any of our places just to be seen as convenient. We want them to be a destination in their own right.”
So the beautiful Cellarium Café, a mitre’s toss from Westminster Abbey, is not just used by visitors to the church and the same can be said of many of its other places, including BBK. Initial expectations were that the majority of its customers would be cinema-goers, but they only make up 20 per cent of custom.
While museums are slightly different – people don’t visit the Natural History Museum purely for a coffee and cake – Warner has worked hard to ensure Benugo’s offer exceeds expectations.
“Museums are no longer seen as just being educational. In the past 10 years, they have become entertainment venues and we’ve been part of that renaissance in helping them achieve that.
“The thing I’m most proud of is that we are still in places after all these years. Contracts typically only last about five years but we don’t have a five-year mentality. We’ve learnt a few things on the way.”
One thing he’s learned is to understand the audience. When Benugo first took over the running of the National History Museum restaurant, it attempted to change the typical museum diner mindset, serving charcuterie and Neal’s Yard cheeses. “No one bought it,” admits Warner. “Finally we gave people what they wanted – food that reflected a fun day out. We put on pizzas and burgers, and sales tripled.”
As such, Benugo’s offer is bespoke to its location. While not everything is different – all its park cafés feature wood-fired pizza ovens and its New York sandwich is on menus company-wide – it tailors its sites to their location. Each restaurant has its own menu, which are overseen by an executive chef, and its concessions also differ. At the Science Museum it operates a stand-alone milkshake bar, while at the British Museum it runs a cookie bar. It has alsostrategically placed a fish and chip van outside the museum to target the large number of Asian visitors it gets.
Early learnings
Benugo’s wide-reaching approach is paying off. This year it will do £106m in sales, up from £87m last year, with like-for-likes up by 6-8 per cent year on year.“I’ve never been worried about profits but rather about sales – sales are the indicator to success,” says Warner. “You can have bad and good write-ups but what dictates success or not is how much money you take.”
Though in good health it hasn’t always been plain sailing for the company, and Warner admits to being “bloody close to the edge” at times. A move into Soho in the early days, for example, cost it around £300,000 and sent a warning shot across the company’s bows.
“Soho 15 years ago was either high end or very low end, in between didn’t work. Our high street cafés rely heavily on takeaway and no one in Soho took away. It looked busy but people sat there for an hour and half with one drink. The rent was too high and in the end it was bringing our business down.”
A more recent failure was at Westfield London, with Benugo again exiting after only a short time. Today, the company is more wary about where it goes and is tapping into new areas for growth. It recently opened a concession in John Lewis in Oxford Street, and a second in Norwich, and this will be followed by further openings in the department store’s branches in Cardiff, Glasgow, Aberdeen, Reading, Chelmsford and Leeds in coming months. These concessions are typically a joint investment, with Benugo paying a fee based on net sales. “We are spreading Benugo out without having to make a big commercial decision,” says Warner.
Department stores are part of its future strategy. As Warner points out: “Some 10 million people visit John Lewis on Oxford Street every year, more than who visit the British Museum.” The company is also looking to open in more transport hubs, adding to its sites in Birmingham New Street, St Pancras International and Waterloo stations and at Luton Airport.
Performing arts is another relatively untapped area for Benugo, and it is looking to move into theatres as well increase its presence in the UK’s numerous public parks – despite having its fingers burnt at Hampstead.
And then there are its high street cafés. Here, Warner admits to having taken his foot off the pedal but his gaze is now trained on them. “We’ve only got eight stores in London but we could do 40 there easily. The high street represents only £20m turnover and we have the cash flow to go where we want.”
The company has also just launched a delivery service at some of its cafés.
Going nationwide and beyond
Warner also has plans to expand its high street cafés beyond London, and says cities in which it already has a presence in public spaces will be the most likely targets – namely Oxford, Bath, Edinburgh, Birmingham, Cardiff and Glasgow. “Whether we do one or five in each I’ve no idea. We’ve got to get our concept right first. Even after 18 years it’s not right, it needs to be simplified.”
There are plans to roll out Benugo internationally and even break into the lucrative US market. The company will soon open its first European site, in the AXA offices in Brussels (“assuming they still want us”) and Warner has ambitions to expand further still. “I’d love to do it in America. I think it will do really well. Whether on the streets or museums, I don’t know. You’ve got to buy a small business out there to do it, but that’s certainly an ambition.”
Overall, he believes Benugo can double its business within five years and says the company is at the right scale to do so. “If you’re a £1m to £2m turnover company, you can’t afford to employ expertise in areas such as health and safety, HR and training. It sounds boring but they are the backbone of your business. We have a very strong foundation; it’s like the rock of Gibraltar. And that’s really expensive.”
This is a positive statement despite his concerns over Brexit. Warner voted to remain and while he’s disappointed with the result he says he doesn’t fear it. He shares the view of some that it might create a short-term tourism boost although has concerns that Benugo’s B&I arm could suffer if companies cut staff or move offices as a result.
Like many in the industry his biggest concern is over staff. “We employ a huge amount of foreign labour and without them we’d be in a different position. It’s hard to employ British people because they don’t turn up to the interviews. Of the 30 or 40 people who turn up each week, we’re lucky to have one or two from the UK.”
Yet this won’t dampen his positivity. If the flack he took over Hampstead Heath taught Warner anything it’s to remain positive and live to fight another day. “I’m determined not to be miserable about [Brexit]. People are walking around as if there has been terrorist attack. Life goes on – get on with it.”
