At the table with... Simon Dodd

10th August 2010, 11:04am

The Orchid Group has worked hard over the last few years to put itself on the map. Clare Riley spoke to commercial director Simon Dodd about its humble beginnings, its pre-pack administration experience and its ambitious expansion plans.

How would you describe The Orchid Group?
We had a clear strategy and it was about creating a hospitality company with a difference. The reason we use the word hospitality is because we're multi-faceted. We have The Living Room and the Oriental Restaurant Group which are pretty much cool restaurants serving fresh food, down to independent locals which are basically your community pub, down to Ultimate Leisure which is high-tempo nightclubs.

With the exception of The Living Room and Bar Room Bar we're not an out and out branded operator.

We work with operating templates such as the carvery which has decor that's very different because we like to work with the individual buildings, but similar food and drink offers.

It's very much kept in line with the business and this is a model we've worked with from the start and in terms of our growth this is where we want to be. Within all of these, hospitality plays a part and it's about giving that little bit extra.

You're famous for going on the acquisition trail. Talk us through those..
Two big acquisitions happened for us last year, we took Bar Room Bar out of administration in June. The great thing about this business is that it's very female friendly and it's aimed at students or post-graduates.

It's a good margin for us and it's fivespeed in terms of getting people in and out and for us we think there's a real future in Bar Room Bar. We're quirky and use things like yardsticks of pizzas and more sharing options. These all work well.

The other big one for us came the week before Christmas, which was the purchase of Premium Bars and Restaurants comprising of The Living Room, which we think is a future star; Bel & Dragon, which we're not sure where to take at the moment; Ultimate Leisure, which is a money-making machine but is a very, very difficult market for us and Prohibition, which was meant to be the drinkssister to Living Room but never really came to life. There's room for potential here and it'll be great if we get it right and it's good.

The biggest purchase of all has to be the one from Punch...
Absolutely. It came on the 25th June and we celebrate this as the Orchid birthday. Everyone in head office and many of our suppliers get involved and we tend to let our hair down. What was striking was the types of businesses we'd inherited. You can see from some of the before and after pictures that they were very, very tired and weren't invested in. They all seem to have the same emerald green throughout them all 290. They're all in great demographic areas but just never had any investment in them. It was a bit like the broken fence scenario where if a fence is broken people will just keep breaking it. But if you invest in it people will be more proud to look after it and we always show people who join the company pictures of what we started with before the £40 million investment.

Where do you position and market yourselves?
We set out a clear strategy, which we describe as the hourglass. We can compete at the top or bottom but we can't get sucked into the middle and effectively no man's land. To be at the top of the hourglass is about added value – it's the best service, great quality and having an experience. Waitrose do this well. You feel better as a Waitrose customer and know you're getting the best. To be nearer the bottom or intrinsic value as we like to call it, it's still about service, quality and experience but tends to be more price-led and more functional. Nando's do a very, very good job at this and Primark is another exceptional job.

Our belief for our market is that we have quite clearly defined offers. Added value at the top which are carvery, Dragons, Modern British (which is our cask ale served with proper British food offering) and then The Living Room. Falling into the intrinsic value category are 2for1s, independent locals or community pubs, added value carvery and Ultimate Leisure. We have some dilemmas of our own with a couple of our brands sitting in the middle and we're not too sure what to do with them. For us we've stuck to our strategy and worked on reducing the price of our food but increasing the quality. We've done that by bringing in Farm Assured and Freedom Food.

How have you managed to sustain growth during the recession?
We've invested in our service and we're doing more training than ever. We think the way to do it in a recession is control the controllables, look after your margins and don't kill your top line by driving people in with vouchers. That's a deliverance for us and we're glad we didn't go into that last year. We think a few of the companies out there are suffering a bit. We did have pressure from our backers saying 'everyone else is doing vouchers, why isn't Orchid?' and we had to justify it and explain that it's not just about price, it's about all these different elements as well.

Orchid seems to be a business that isn't afraid of a challenge and doesn't rest on its laurels...
Yes I'd agree with that. When we started the company in 2006, we were interviewing people, with no head office, and they were asking questions such as 'what's the contract like?', 'what's the strategy?' and when the answers were 'we don't know', some people's jaws dropped and other people said well this is great we can help piece it all together. We call it the 'Orchid Way', you either get us or you don't. We do move at a fast pace and a lot happens.

Would you say you've made mistakes along the way?
Yes because it's the only way you learn. We took Asian tapas into the ORG and we used to call it 'Suzi Wrongs' because it just didn't work for us. Nobody loses their jobs, we just learn from it. We tried another thing called contemporary drinking, which was very, very female focused bars and we took it too far. Now we know what works. We've learned that we're very good at making acquisitions and integrating businesses.

Let's talk about what happened when Orchid fell into pre-pack administration...
Well 2008 was a diffi cult year and it's fair to say we've been through our dark times. A lot of the press were waiting for us for fall over a little bit. We went into pre-pack administration on December 12th 2008 so we had to form a new company, bring the suppliers with us, pay off old debts. We survived Christmas and that was largely down to our suppliers because if they hadn't supplied us we wouldn't have survived. We talked through what was happening with our suppliers and luckily we have a really good relationship with them. The good news is that we've paid off all of our old debt and kept every supplier we've worked with since 2006 and no one lost their jobs on the board. The strategy has always been right but we basically overpaid for a business and the assets in 2006. We've now got it right with the banks.

Was that quite an emotional time for all involved?
This will sound strange, and quite dark really, but it was exciting and was another chapter in Orchid. You didn't know what the next day was bringing but we all knew fundamentally that what we were doing was right. At the time it was just a case of let's get through Christmas and then we'll carry on doing what we're doing. It was quite scary at times in terms of paying the mortgage but what doesn't kill you makes you stronger. In hindsight, it was probably one of the best things that ever happened to us and we're so much stronger now than we ever were.

You've won many accolades too. How does that feel when the business is still young?
It feels great. I think our proudest moment was landing a spot in the Sunday Times Best 25 Big Companies. I think we were one of the first companies that was three years old to enter and I think if you ask Rufus and the board, that'd be our proudest achievement. One day we'd love to be like Nando's and be number one. Food awards are great too. We're now at 45% food and when we bought the business it was 37% and we are passionate about our food. We've put things like sea bass and bison on the menu and injected a point of difference and it pays off.

Charity and CSR work seems to be embedded in your strategy. Why is that so crucial?
One of our main values is 'proud to be part of the community' and one of the things that came back in the Sunday Times feedback is that our staff and our people feel proud when they are completing community initiatives and they are giving something back. We are an industry that is heavily regulated and we do encourage people to eat and drink and enjoy themselves but the other side to that is if we can do something that helps people and gives us positive PR - we are a business after all - then that's great.

The hearts and minds of the managers getting involved is absolutely immense. We held a football shirt amnesty and gave away 20,000 football tops in South Africa. Rufus went out there and was distributing them in Soweto and the pride on the kids' faces was just great and you could tell it made a difference.

We've just asked our staff to nominate a charity for us to donate to and they came back with Orchid Cancer Charity. In six weeks time we'll run our first initiative with them. Charity is genuinely very important for us.

Where does the future lie for Orchid?
It's not necessarily about being the biggest pub company but it is about being the best. What we're finding in an overcrowded market like this one is that customers are constantly wanting more and they're becoming very savvy. The next big thing for us is cracking new media. We have a Facebook page and we have a Twitter page but the question is what do you do with it. There's huge potential in gathering customer data and talking to our customers regularly. It won't be 'Orchid' speaking to customers though, it will be The Living Room. People are making their minds up on the net and they're relying on texts. We have one million customers on our database and we must do it in a way where our emails aren't ending up in the trash. We're learning all the time and we never know what's around the corner. It's all very exciting.

Related Articles:

• 10 Nov 2010 - Bookings increase at Orchid pubs as customers plan to celebrate
• 19 Oct 2010 - Orchid wins National Training Award
• 06 Oct 2010 - Orchid managers volunteer in South African Townships