Espresso: Tom Kerridge - You'd be Crazy to Open a Restaurant (Without Knowing This..)

0:00Tom Kerridge:Sure. So, like, we've been in business, the Hand of Flowers has been open 20 years, and in those 20 years, and I've been a chef for 35 almost, and you look at, you go through periods and everything always looks frightening. And, you know, we've been through recessions before, we've been through situations, we've been through problems within the industry. Not once ever, since I started cooking to this point now, we've always gone, yeah, there's loads of staff. Yeah, we've got thousands of sous chefs to choose from. it's never been there so there's always those continuous issues I think what happens now the biggest problem is margins and margins have been eroded completely so restaurants don't make money I mean even super busy ones there's a few that operate in London that are absolutely packed the whole time that are doing well everyone else in London is making very small percentage points like up and down the country and maybe even worse outside of the country where like Tuesday, Wednesday evenings, lunchtimes are quiet.

1:01Tom Kerridge:And, you know, so the margins are completely eradicated. And that's the issue where moving forward, why would you open a restaurant? Why would you do it? I mean, young entrepreneurial chefs, people who want to cook with excitement and or front of house teams that want to create an amazing energy or an atmosphere or a bar. Why would you do it if there's no profit in it? you may as well work for somebody else now where pay is really competitive because everyone's trying to attract staff the time off you get you know five weeks holiday the whatever like you get all of those trappings why would you open your own restaurant to earn less money sure and have less time without without any of the positives that necessarily come with it so those are the big issues that i think we have to face as an industry as a whole we have to look at the structure of it we also have to educate guests i mean we're continuously taught on things like this or every opportunity you go the only way that any operator makes money whether it's a small coffee house to a five-star hotel to a two mission star restaurant to whatever is by what it can charge for a plate of food now everything else that comes with it has to be paid for by the amount of money you pay for a bone-to-roll chicken breast or a well you know you know those kind of things that you just go with so it's an education point of view from a guest an understanding and it does feel i think it does tick a lot of boxes if you if you want to look at negativity for fear factor you want to look but hospitality has always been one of those industries that it exists it's not um it needs government help it needs things like vat reduction we need to be taxed and i know there's so many different people that push and speak to government myself included on where taxation the way it needs to work and taxation needs to come on profit related not front end but back end it needs to not not be on you know vat it needs to not be on um the front end taxes it needs to be on if it makes profit you know that's where we'll take the tax but it's also a very difficult space from a social perspective because if you look at what's happening from a from a social perspective it's very very difficult to then say well we're not going to take the same amount of money out of hospitality so it's quite hard to sell that into the people that make decisions and there are so many places that are shutting so many places that are closing and how we get through it i'm not entirely i'm not i genuinely haven't got the answer the so as you said mate in terms of your 20 years in the game you've almost you know so it's never never been easy it's never been like let's smell the roses it's been a grind it's been a graft if we almost had like a tom carriage cookbook of business principles one two three yeah that you know you've now moved from sort of as you say cook to chef to operate a restaurateur yeah what are some of those one to three principles never be scared of making the hard decisions like never be scared of going you have to separate yourself from the problem with restaurant ownership yeah So much of it is personality and personal.

4:13Tom Kerridge:So you create, you build teams and you build wonderful people around you and you create and you get chefs that cook or you cook food that is so personally to you. You open your heart with what you do and then you meet other people in the, you know, the fish supplier or your veg supplier or the people that deliver or the grow, you know, wines or brew beer or they're all people that's led with passion. so you get dragged into being personally attached to every little pinpoint and those personal points make restaurants busy yes because as a guest and a customer you come in you go and this is all magical and it's all about this and the stories but then you have to separate yourself and it has to be you have to make business-like decisions you have to go actually i can't afford to buy this incredible olive oil that they only make 200 bottles of it a year and i drizzled it on because it's beautifully it tastes but actually just a drizzle of that olive oil cost me three quid what i can't i can't put that then what have been the hardest decisions you've had to make where you've had to separate you from that personal tether to those people closing businesses closing businesses post covid you know shutting places down and working out and having to explain to people that is this isn't it's not a personal thing it's not be but we just can't operate the businesses don't work it doesn't make money we can't do anything about it that's you know we are we have to so you know we've shut you know we've shut businesses we have to re-adapt we have to close you have to leave you have to let people go and those are the really those are the really hard decisions but you also then have to remind yourself that when you've switched from being the chef in the kitchen and being that person to being a restaurant so you've then become a business person you have to put yourself in a lord sugar like peter jones style position and go actually it's just about business.

6:01One of the, I watched, it must have been a couple of years ago, that interview you did with Gary Neville.

6:06Tom Kerridge:Yeah. When you, was it the Bull and Bear? Bull and Bear in Manchester. And I thought that was a masterclass in like, I think you really are the sum of the hard conversations you have. You've got to have difficult conversations, but the way you and Gary just sat there and so sort of straightforward, very polite to each other and just frank. Yeah. Like, what would you say the art of that is? What have you learned about that? You have to remove yourself from the, you have to, remind yourself of why you're doing it if it's your business and it's your thing and what you're doing and you have to not be you have to try and disconnect from the personal attachment that you have so that when you say look this isn't this is a situation that is business related if you need to you can show them figures you know when we're very open with actually this is how much money this makes or this is how much it is losing you know we have a management meeting every Wednesday where all of the businesses in Marlowe we have a management meeting here today we have a monthly one here and in the Marlowe sites we have one where we visit on a weekly basis.

7:04Tom Kerridge:We're very happy to have those open conversations going, listen, last week net turnover, net profit was actually a deficit. We did not make money. We lost this. And then at the end of the month, these are the figures, this is it. And if it makes, so for example, we might go this month, this small little site made seven grand net profit, not a lot of money it's amazing but this morning you've come to me and told me that the grill's broken uh it's seven years old you better buy a new the options are fix it and it's nine grand or buy a new one and it's 13 grand so although we've made seven grand we've now we're now lost because something's broken we've got to always remind us and quite often you've got it's good to be open with staff so they have an understanding of what's going on cash flow coming in and out so that when it comes of the conversation point of view they understand it and it's it's good for particularly as they grow into coming to senior management level because your expectations levels of them are you have to operate as a profit you have to you have to be making you know i'm not on top of the guys every day of going well why have we ordered four whole sea bass as opposed to two you know well why we only need that or we only they have to take responsibility for it so sense allowing people to become personally and professionally responsible then helps further decision making when you explain this is what you've got to do because you can remove yourself from the personality and go, it's a business thing.

8:25Tom Kerridge:But it is a really difficult thing. Yeah, so it's almost like the first principle is separate yourself but make the hard decision. What would you say is the second principle in the carriage cookbook of business? Remind yourself that if it was, somebody once said to me when I first opened, if it was easy, everyone would do it. And you go, okay, you have to remind yourself of that. and it is if it was easy everyone would do it and because it's not everyone can run a business not everyone can make it work and it's never easy there's never an easy day you have to also once you own a business there's never there's never a day off you might not be at work you might not be but you're all there's always you're only a phone call away there's always an imminent disaster somewhere someone somewhere is doing something stupid in your business all the time do you like fear?

9:13is that

9:15Tom Kerridge:do I like fear? yeah I like risk it makes you feel alive that things are going, you know things are happening I don't like being a passenger I don't like being a passenger and watching things go on I like being in amongst what's happening it's tailwind when you're in control of it it's tailwind when you're a passenger like Covid was quite a really horrific time for the restaurant industry and it was a really awful period for working for what was going on for for staff for people for not knowing particularly the beginning bit where nobody had any idea what was going on how to deal with it what was happening so that when a bit of infrastructure came in and we all kind of understood how or what we were going to do and you start it i in a really funny way i thoroughly enjoyed it because it was that infrastructure of business management.

10:14Tom Kerridge:How do we get through it? What have we got to do? How do we survive? What decisions have we got to make? All of those, I suppose, out of your control businesses that you're navigating the infrastructure of a business and trying to make it not collapse or not. How do you solve those problems? Problem solving. I like the problem solving. Don't get me wrong. I hated it. We lost an absolute ton of money and we lost some amazing people but i the decision making the process of going through it in a really weird way i quite enjoyed the challenge the chat i quite enjoyed the challenge i never want to do it again don't get me wrong i never want to do it again but i i quite enjoyed the thinking process sat with our managing director having conversations every day about well what do we do how do we solve that where's the cash when you've got sat on this whole group tom you've probably got thousands of missiles point in your head like yeah you need to do like the problem solving bit like how do you actually solve them when you've got where do you start just what i'm saying there's as you said something's broken there's a team member i've learned very that's the one difference between being a chef and then a restaurateur and an owner is to not be reactionary chefs have to operate in a kitchen on a reactionary basis so you can be proactive in a kitchen you can have all your infrastructure in place you can get all your mise en place and all that understanding of what's going on but you're reactionary to service so a plate comes back or a steak's overcooked or a chef's you know dropped something coming up to the pass or there's the sauce isn't ready or the so you have to be ready to be reactionary very very quickly um when you're having to make business decisions and you're having to you become a restaurateur you have to then look at a much bigger picture so if you react to something it might cause a domino effect in business or to infrastructure.

12:00So you have to take a step back and you have to go,

12:04Tom Kerridge:you have to analyze and you have to think, you have to think three or four steps ahead of everything else because what does that affect to that do, to that, that, that and that. Whereas a chef suddenly goes, the sauce has dropped on the floor, get a new fucking sauce on quick. Now move because the sea bass is there. That's ready to go. Okay, front of ice, you can take that, that sauce will be ready in time. So you can react real quick. In business, you have to go, okay, that's a problem. That's an issue, right? Let's just stop, reset, think about it work it out you have to give yourself time and those are I think the big differences between has that been the hardest thing moving from chef to to basically entrepreneur to restaurateur yeah interesting is there an example but maybe other than COVID of where you've had to go through that process of thinking three steps ahead yeah I think all the time when you're like opening businesses changing the structure for example the chalk that was set up originally as one particular business you know you rebuild you open a place you spend loads of money trying to get it right and then it doesn't work and you have to go, okay, so you have to go, you have to work out right.

13:04Tom Kerridge:Are we going to... Was that the butchers? The butchers tap and grow and you go, okay, so it half works, it works at a weekend. Because I've been to the one in Marlow and it was banging. Marlow one works. So you thought it would work in Chelsea. Monday, Tuesday, Wednesday, the business isn't busy enough. Thursday and Friday, it would be busy drinking, but the revenues are on burgers and maybe a high end steak every now and then. But then the revenues aren't enough to justify the space being open from the beginning. Also, you go, actually, people in Chelsea want to make a reservation. They want to book.

13:37Tom Kerridge:They want to know that they're going out on a Friday or a Saturday night. They want a table as opposed to just turning up. Whereas Marlow is that we've already got the hand of flowers and we've already got the coach where you can book and go in. The butcher's tap is just... It's that brand halo effect almost. Exactly. So you go, right, okay, so we need to rethink this. How do we do? People want to book. They want to know they're going out. So you have to take steps back and understand, and then you can reevaluate and the cost of redoing and what do you do? And then you go, okay, well, this is something that we've got to do.

14:03Tom Kerridge:So that's a prime case of instead of being reactionary to it, you have to analyze and work out and hope that the new infrastructure works again. And you go, right, okay, let's see what happens now. And then you have to decide whether you're going to fail quickly or whether you're going to keep going or whether what you're doing is working and it's tweaking and it's turning around. You can feel the green shoots of growth beginning to come through. response