An Appetite for Growth

Steve Richards, CEO of the PE-backed restaurant company, Casual Dining Group, talks to Mary-Anne Baldwin about how he’s overhauled the business teve Richards is a man who works restaurant business externally for some “The first thing I did was hire an Sat speed. In the two and half years as six months, he became CEO in early experienced team of executives who CEO of Casual Dining Group he’s taken 2014, just weeks before embarking on shared the vision and were capable the business through every conceivable a radical transformation programme. of executing it”. milestone, including the divestment of one restaurant chain, the purchase of “It was trading poorly, highly leveraged Tragus Group, had 355 restaurant two others, two re-financings, group and, because it had such a large amount property leases and wanted the best 180, and restaurant chain rebranding and of debt on its balance sheet, it hadn’t so there needed to be some early ‘heavy international expansion. been investing in its brands or people lifting’. It trimmed down the number for quite some time,” Steve explains. “The through a process of disposals and He’s just as quick at explaining all this business was declining, there was a high corporate reorganisation. “It was a bit like to me during a half hour interview, turnover of people and low customer peeling back the onion skin,” says Steve. yet he does so with the precise detail feedback scores. Basically the brands and calm momentum that comes with were tired and losing customer relevance”. “Having rationalised the property footprint years of experience in transforming we then right-sized the balance sheet and large complex businesses. During the months before being took the debt EBITDA ratio from double appointed CEO, Steve had composed figures to three. We then right-sized Steve first started work on the business a plan that for the first year alone the head office and rebranded as Casual in 2013 when it was still owned by comprised a mind-blogging set of Dining Group [CDG]. That was stage one Blackstone, operated under the name undertakings − including the sale of and the first 12 months had flown by.” Tragus Group, and consisted of the high Strada within the first seven months. street restaurant chains, Strada, Bella While the first step was to create a Italia and Café Rouge. “We had a clear vision to create an highly profitable and focused business, industry leading multi-branded restaurant stage two was about investing in its The business was acquired by a new business, one that was highly scalable property, people and products. The group consortium of shareholders led by Apollo and capable of generating sector leading ploughed £70 million into refreshing its Global Management where Steve was an consumer, employee and financial metrics,” existing restaurant brands while creating operating partner. Having worked on the Steve explains. a pipeline of 25 new sites each year. >

Timeline

October 2013 May 2014 Sept 2014 February 2015 December 2015 June 2016 Steve Richards begins New Management Sale of Strada Company rebrands as Second refinancing Creates incubator work on Tragus team hired First refinancing Casual Dining Group with KKR funds for start-ups

March 2014 June – August 2014 November 2014 July 2015 Apollo acquires Group CVA and First new site openings £85m purchase of Las Iguanas Tragus Group property reorganisation £20m purchase of La Tasca Steve Richards August 2014 October 2014 becomes CEO HO reorganised with £70m brand refresh March 2016 30% cost reduction programme begins Starts international expansion with first restaurant franchise in India

www.criticaleye.com An Appetite for Growth 2 day findingtalent is never easy.” development teams, butat theendof the in place specialistrecruitment, training and issues andstrategies,” says Steve. “We put 24months.within “That creates itsown current crop of 8,500employees to 14,000 This year, CDG will have to increase its One hurdle still to overcome is recruitment. brand itdidn’t affect the others.” we were acquiring or turningaround one in terms of the individual brands and while we’re“Asgroup a ableto move very fast and group finance director.director into meare thebrand MDs, property brand plan. The only people who report management teams indelivering their and basically the support resources, their growth plans,approve capex and the strategy thebrands,with assess says Steve. “At group level we agree management board, strategy andKPIs,” as astandalonebusiness with itsown way that eachrestaurant brand operates “I structured a thebusinessinsuch of direction andpurpose. seat allowed himto keep aclear sense plans Steve madeprior to takingthehot destabilised thebusinessfurther, yet the Such dramatic changes could easily have Mapping theBusiness cent per annum.” Steve explains. cent andtotal growth northof 20per generates areturn oncapex of 35per multi-branded restaurant company. It “Today CDGistheUK’s second largest chain, La Tasca, justonemonth later. paying £20mfor theSpanish restaurant keenly fought £85milliondeal,as well as restaurant chain,LasIguanas, ina It alsobought theLatin American www.criticaleye.com

Scanning theHorizon Steve explains. some pick winning scalablebrands,” innovation occurring inthesector and to beinvolvedexciting insomeof the By backingearly stage talenthope we and thefreedom to deliver their vision. boost fewa growth, givingtheselect barriers to early-stage the remove will purchasing expertise. Basically, we back-office support, property and for themto grow, provide finance, “We want to create asafe harbour strong growth prospects. onlywith two or three restaurants but entrepreneurs,backing start-up often sidecar ‘incubator fund’ that focuses on specifics. For now, CDGis raising anew although Steve won’t bedrawn into Further acquisitions maybe onthecards, restaurants inSaudi Arabia,” Steve adds. India andsigningadealto open18 Café Rouge inDubai, Bella Italia in brands abroad, openingupour first “We’ve alsostarted franchising our chip USinvestors, ledby Apollo. ofthe support aconsortium of blue- KKR inDecember 2015,andthrough refinancing, whichcamefrom PE-giant bolstered by thebusiness’ second debt other UKrestaurant brand. It’s been this year andnext –more thanany opening of more than30new sites Part of that missioninvolves the will hebeableto maximise value. growth andthat only by doingso business that’s primedfor long-term his role asbuildingasustainable is not Steve’s only driver. He sees a valuable exit isinevitablethis but As aPE-backed CEO, at somestage Email Share Tweet

focused on your shareholders. vehicle you’re generally muchmore led. But if you’re leadingalarge scale maybe relatively andmanagement quick more control over theexit process, which work. A CEO inanSMEprobably has and beingflexible enough to make it “Part of therole isliving with uncertainty of anexit,” hesays. CEO you can’t totally control thetiming “Youhappen. have to accept that asa is pretty philosophical on whenthis will to what shouldbearewarding exit, Steve While allof theseelements are building Steve Richards was akey speaker. Private Equity Retreatat which , the sidelinesof Criticaleye’s recent These comments were shared on www.criticaleye.com Contact Steve through: of its220member companies. which lobbies Whitehall onbehalf the hospitality’s leadingtrade body, business and Chairman of the ALMR, European budget accommodation Steve iscurrently NEDfor apan- having formed thecompany in2006. and Hutton Collins for £100million Novus Leisure, in2012to LGV Steve soldhisformer business, Las Iguanas. Cafe Rouge, Bella Italia, Belgo and which comprises restaurant brands Management and York Capital, group backed by Apollo Global Group, themulti-branded restaurant Steve istheCEO of CasualDining Casual Dining Group CEO Steve Richards An Appetite for Growth

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