Follow-on investment for Boost
BGF provided Boost Juice Bars UK (Boost) with follow on funding in December 2014 after a continued period of growth. BGF’s investment in the company now stands at £3.9m, up from the £2.5m committed in December 2012.
The number of Boost stores in the UK has more than doubled from 10 to 25 with sales approaching £10m over the last 18 months. New flagship stores have launched in London, Newcastle, Brighton and Birmingham along with other major cities across the UK. The original 10 stores – including Manchester’s Trafford Centre and Meadowhall Sheffield – continue to show very strong like for like sales growth, as they approach nearly eight years of trading and as the “well-being” sector continues to find favour among food and beverage consumers. Manchester Trafford Centre now hosts two Boost Juice Bars and remains the busiest location for the company across its global footprint of 350 stores in 16 countries.
The company behind Boost, Manchester-based TD4 (to die for) Brands, will use the follow-on capital to accelerate the roll-out, with locations identified for another 20 stores over two years.
Co-founders, Richard and Dawn O’Sullivan, retained their existing shareholding while their long standing non-executive chairman Bill Holroyd, one of the original backers and current non-executive at AO.com, increased his shareholding in the company. BGF, which provides long-term and patient capital as well as access to a network of support for growing businesses, remained a minority shareholder.
Richard and Dawn O’Sullivan bought the exclusive rights to operate the Boost business in the UK and the Republic of Ireland in 2006, shortly after selling their original business Millies Cookies to Compass PLC.
Times’ Business Heroes in association with BGF
The UK boasts many of the most innovative and fast-growing businesses in the world. Collaborating with The Times and The Sunday Times, BGF is uncovering some of their stories to salute our British Business Heroes. These are the stories of the business owners and entrepreneurs running successful companies, creating valuable employment and driving the UK economy. Click on the link below to take a look at their video stories and also watch an introduction by Stephen Welton, CEO of BGF.
Other BGF portfolio companies featured include:
Neil joined BGF in November 2011 as an Investor based in Manchester. In this role, Neil is involved in all aspects of the investment process from origination through to completion, and supports companies throughout the investment hold period.
Neil has gained private equity experience at ANZ Private Equity in Sydney and latterly with Infinity PE in the North West, where he was involved in executing and managing a number of investments across a range of sectors.
He began his career at PWC and worked in both the Manchester and Sydney offices in the Transaction Services division. Neil is a qualified Chartered Accountant and holds a BA (Hons) in Economics from the University of Sheffield.
Latest investments/Board positions:
- Grace Cole (Board Director)
- Hobs Reprographics (Board Director)
- Nationwide Window Cleaning (Board Director)
- Medicina (Board Observer)
- Barburrito (Board Observer)
- Springfield Healthcare Group
- Boost Juice Bars (Board Observer)
- Horbury Group (Board Director)
- Broadband Satellite Services
- Kids Planet (Board Director)
- High Access Maintenance (Board Director)
- RSK Group
Regional Director – North, Scotland & Northern Ireland
Andy is a member of the BGF Investment Committee and leads our investment team in the North of England, Scotland and Northern Ireland, identifying and executing investments for the Fund. He sits on the board of some of BGF’s investee companies. Andy has significant experience of regional private equity, having worked as a director in the Manchester offices of ISIS Equity Partners, Bridgepoint, and Royal Bank Development Capital.
Most recently Andy was a key member of leading investment firm Key Capital Partners, based in Manchester. He is a chartered accountant with 17 years’ experience in private equity, acquisition finance and corporate finance.
He also has industry experience, having been group finance director of Pennine Retail Systems Limited, a leading UK retail software company which was successfully backed by private equity.
Andy is married with two young children and lives in Cheshire. In his limited leisure he tries, and generally fails, to impress his children by playing the piano and whilst on holiday loves to windsurf or snowboard depending on the time of year.
“I joined BGF to establish our business in the North, having been hugely excited by the prospect of helping to build a business from scratch and bring a new type funding solution to growing companies. I continue to gain huge satisfaction from working with ambitious entrepreneurs and helping them to accelerate the growth of their businesses.”
- Moda in Pelle
- Nationwide Window Cleaning
- Boost Juice Bars
- Springfield Healthcare Group
- Better Bathrooms
INVESTING IN THE RESTAURANT SECTOR
This article first appeared in Caterer and Hotelkeeper magazine May 2013
By Andy Gregory
George Osborne’s Budget may have been full of gloomy economic updates but it also included some patches of light for the leisure and hospitality sector.
In an industry where good news has been in short supply since the crisis, these concessions will add to the perception that light at the end of the tunnel is just about coming into view – and encourage more businesses to invest accordingly.
On the demand side, while serious headwinds remain, the Chancellor’s decision to freeze the fuel escalator and further extend income tax personal allowances will boost consumers’ spending power (and the tax cut on beer was a subtle nod from Mr Osborne on how to use that boost that many in the sector will appreciate).
Moreover, the Treasury also offered supply-side reforms that will benefit employers in the industry as they seek to grow their businesses. The Employment Allowance, which comes into effect next April, will subsidise employers’ national insurance contributions by up to £2,000 a year. The Chancellor says up to 2.5 million employers will qualify for the new allowance, while 450,000 of the UK’s smallest businesses will pay no employer national insurance contributions at all.
The measure is specifically aimed at boosting job creation – it effectively means a business will be able to hire one new member of staff on an annual salary of £22,500, or four employees on the minimum wage, without incurring any additional national insurance contributions.
For labour-intensive businesses in the leisure and hospitality sector, that’s a welcome reform – particularly for those with ambitions to expand. It should encourage more companies to open new sites and hire new staff.
Nevertheless, a programme of openings – particularly if it is aggressive and ambitious – requires significant investment. And while the climate for openings may feel more benign, the problem of how to fund site roll-outs hasn’t gone away.
It’s a common dilemma for fast-growing leisure and hospitality businesses.
Though it may be possible to finance some additional openings from cashflows at existing outlets, rolling out new sites in this way is likely to be a slow process. And that delay might mean missing out on prime sites, or seeing competitors steal a march.
While bank debt might be a solution – assuming this form of finance is even available – it is likely to come with strict performance-related covenants. Businesses often encounter unexpected difficulties when developing new sites and such covenants can leave them vulnerable as they try to cope with these short-term setbacks.
Business Growth Fund may be able to help. The long-term equity finance we provide is well-suited to businesses with ambitious and realistic plans to grow rapidly. It can deliver the funding that will enable companies to realise those plans with a cushion of protection to see them through hiccups along the way.
We will invest between £2m to £10m in businesses with an annual turnover of between £5m and £100m. We only take minority stakes in companies; we are building not buying businesses – and doing so for the long-term.
The leisure and hospitality businesses in which BGF has already taken stakes are proving that despite the difficult economic climate, it is possible to prosper and grow with the right business plan – and the support necessary to underpin that growth.
BGF’s investments in the sector began in March 2012 with a £3.25m stake in Barburitto, a Mexican restaurant chain with six outlets in the North of England.
The investment has kick-started a rollout programme, with Barburrito planning to triple the number of its restaurants it operates within four years. The business began that programme in March 2013 with the launch of its first London restaurant, in London’s Paddington Station. It expects to open a further three outlets over the next few months.
Similar investments include Boost Juice which was launched in the UK by Richard O’Sullivan, whose track record in the sector includes the development of Millie’s Cookies, which he built to 100 stores before selling up for £24m. O’Sullivan launched 10 Boost bars before approaching BGF for help with dramatically accelerating the rollout of the chain. The fund’s £2.5m investment in the company, made at the end of last year, should enable the company to open 10 new sites in each of the next three years.
Then there’s Peyton & Byrne, the family business of celebrity chef Oliver Peyton, where a £6.25m investment made by BGF last December has given the company the firepower that it needs to expand on several fronts. BGF also introduced Peyton & Byrne to Mike Johnson, the former chief executive of Whitbread’s restaurant chain, and he is now helping the company roll out more of its bakeries and restaurants.
At Wear Inns, meanwhile, an £8m investment by BGF in May 2012, together with additional funds from an existing investor, has already enabled the pub chain to add 11 new pubs to the 15-strong portfolio it had previously built up. Wear’s strategy is to buy up underperforming pubs with the aim of reversing their fortunes – it’s an intelligent business plan, but one that may require significant investment.
Finally, there’s Camino, a chain of tapas bars in London run by an experienced management team that have previously built a diverse range of successful bar and restaurant businesses. BGF put £3m into the business in December 2012 and Camino now plans to step up its site rollout programme – and to double the number of people it employs.
What do these businesses have in common, other than operating in different parts of the same sector? Each company has ambitious plans for the future and a realistic roadmap for getting there. BGF’s money will help them fulfil their potential.
A DAY IN THE LIFE: BARBURRITO
A HEALTHY PARTNERSHIP
By Luke Archer
Securing lucrative contracts, launching innovative products and closing game-changing deals are all part of an entrepreneur’s life, but what really goes on during the day-to-day operations. Luke Archer meets Barburrito founders Paul Kilpatrick and Morgan Davies to find out what they get up to.
Entrepreneurs are, on the whole, creatures of habit; they have their own way of doing things, charged by a belief that it is the only route to achieve the goal of building a successful business.
However, for Barburrito co-founders Morgan Davies and Paul Kilpatrick routine doesn’t have a chance to establish itself in an average working day, as they work to roll out their Mexican food chain and treble its size in three years.
The two ex-management consultants have taken up very different roles within the business, with Paul spearheading the acquisition of new sites while Morgan has taken responsibility for the coal face, ensuring that their existing locations are meeting the exacting standards that have been put in place.
On the day we met the duo rose at a similar early morning hour and, having arrived at work (Paul by bike to cram in some exercise), spent the first hour of the day completing the unenviable task of sifting through their email inboxes.
With BGF as a long term investor and £3.25 million, Barburrito is now embarking on an ambitious roll-out plan which will include cracking the London market. Like every Tuesday morning, the next task on the agenda is to look at the financial performance of each restaurant (the business now has six) to pick up any irregularities. Weekend trading has been strong across all sites, and today there are no specific problems.
Morgan has taken on the role of managing the day-to-day running of each restaurant to ensure that the treatment of each site is consistent. So, with nothing untoward to find in the financials, he can start talking with the restaurant managers to plan the day ahead. Morgan likes to begin by reviewing pivotal procedures such as operational standards, team quality, cost controls and any upcoming marketing opportunities or events. With Barburrito hoping to prosper from repeat trade, its success will come down to enticing customers into returning multiple times a week.
Today the first port of call is Barburrito’s Manchester Piccadilly restaurant, where he meets with store manager Sarah to discuss the operational priorities for the day.
There is also time for Morgan’s favourite task – introducing himself to the new Barburrito recruits. He wants to find out how their training is going, and he asks specific questions around the quality of their induction, who their buddy trainer is and he makes sure they are generally on track with their development. Morgan also uses his morning to field a call from BGF’s Regional Director for the North of England, Andy Gregory, to discuss meeting with other companies, in the area and in the hospitality sector, that are considering BGF funding. It’s a task he enjoys and allows him to offer a perspective on life with BGF as a junior partner.
While Morgan’s morning was very much spent in the guts of the business, for Paul the period provided him with an opportunity to push on with his key projects. On the day we met Paul had a supply chain issue to resolve, the ongoing re-fit of one of Barburrito’s current stores to oversee and he wanted to get a update from the team working to develop a new breakfast offering. But top priority for Paul is the drive to find new restaurant sites.
Finding a new site involves ticking a number of boxes which Paul and Morgan believe are necessary to ensure that a new restaurant will provide not only the right amount of footfall, but the right kind as well. Sites in high-density office or student populations are top of the list. These restaurants benefit from repeated and sustained visits as well as some social/weekend trade. Underneath a large office block, rather than in an out of town shopping centre, is where they believe Barburrito is best suited.
Paul is working his way through a long list of potential locations; a task which he said can be about whittling down 100 prospective sites to a shortlist of six or so for personal viewing. He aids this task by using tools such as Google Maps and Streetview to get a better feel for the area surrounding the possible spot. Sites which fail at the first hurdle tend to be ones in the wrong location or units that are long and thin with big step changes of height. To help with site selection and to ensure that new restaurants hit the ground running, Barburrito has brought in an industry heavyweight to provide some advice. To coincide with the investment deal, the chain secured the services of former Pret A Manger and EAT-board member Colin
Hughes as a non-executive director. With Hughes having opened over 100 sites across the country, Paul tells me that he has an incredible understanding on locations. Today Paul takes the opportunity to give Colin a quick call to discuss a couple of potential sites in an area he is not familiar with.
Colin has a particularly good knowledge of the London market and has been vital in supporting Paul’s on-the-ground work in identifying potential locations. Further support comes from another non-executive, Richard O’Sullivan who possesses the nickname Cookie having co-founded Millie’s Cookies back in the 80’s and rolled it out across the UK.
While ultimately Paul relies on good old fashioned shoe leather to search for new restaurant sites, today he is hammering out the details of the four offers that Barburrito has recently made, and that will hopefully take the chain into double digits. Nailing the right site, he told me, is imperative – as getting a good one can make the business, while taking on a bad one can take years to recover from.
The lunch period is when Morgan closes his laptop and joins the front line by helping out in the restaurant to make sure services standards are being met, a factor which both Paul and Morgan say has to stay at the top of their priority list. On this particular day Morgan is front of house, greeting customers, clearing tables and giving people an opportunity to interact with one of the owners first hand.
With the busiest period of the day over, Morgan puts in a call with BGF’s Head of HR Jenny Chandler to discuss the latest draft of Barburrito’s Employee Handbook. He is keen to leverage best practice from the BGF portfolio.
Morgan also speaks with Colin Hughes. He wants to discuss the first set of results from Barburrito’s new operational audit partner. While the business is building the bones of a solid management team which can begin to take on further responsibility as the restaurant site number rises, for now Morgan likes to ensure that he has his hand firmly on the wheel of every location.
Despite the two having taken responsibility for different facets of the business, throughout the day Paul and Morgan make sure they touch base to check on the others’ progress and bounce ideas off each other throughout the day. Both acknowledge that being co-founders has provided the pair with an invaluable outlet to leverage different skill sets and take time away from board meetings to evaluate the performance of the company and plan for the future.
Engaging in social media is Paul’s favourite part of the day and in the afternoon he picks up on a couple of tweets from customers which bring a smile to his face and prove that the Barburrito brand is moving in the right direction. Like any entrepreneur, praise brings validation to what they are doing – and during a visit to Barburrito’s Trafford Centre location a week before, his frustrations at what he saw were errors on the restaurant floor were quickly extinguished when he overheard a small girl telling her mother how delicious the meal she’d just eaten had been. He also picked up on a Facebook posting which presented a Barburrito-branded Nicorette style patch on a girls arm with the caption ‘Will this help?’ and a subsequent comment reading ‘I’m hooked!’
For the remainder of the afternoon Morgan navigates around a number of Barburrito’s sites in Manchester as part of his weekly effort to make sure he visits all of its restaurants in the city, as well as its Leeds and Liverpool establishments. He says it is important that all the restaurant teams get time with the owners. He’s frank in admitting that the business is run and operated by the staff on its restaurant floors, a fact he and Paul cannot afford to forget.
Having spent the day surrounded by burritos, rather surprisingly the hard-working entrepreneurs like to do their own cooking at home (just not Mexican!). In the evenings Paul and Morgan both like to make time for their children, providing a welcome break from the pressures of building a business. Leaving the office means an end to email communication, I’m told, but engaging with social media at the end of the day remains a guilty pleasure for Paul and helps motivate him ahead of the challenges facing him the next day.