Mark Derry is wondering what happened to all those other fish. “It's a funny
industry,” he says. “I wouldn't want to sound disparaging, but everything
today is line-caught or fresh. As to the stuff that comes off the trawlers,
I don't know where that goes.”
Presumably to the manufacturers of ready meals, to emerge in due course as
fish cakes or fish fingers. Certainly none finds its way to Loch Fyne, the
40-strong restaurant chain where Mr Derry is chief executive.
The chain was spun out in 1997 from Loch Fyne Oysters, the fresh fish business
in Strathclyde on the bank of Scotland's biggest sea loch. This came to
unexpected political prominence in 2004 when it was allegedly the site of a
meeting between Gordon Brown and John Prescott to stitch up the Blair
succession.
At the time Mr Derry said of the so-called “oyster summit”: “You couldn't buy
publicity like that for less than about £20 million.”
We meet at the wet fish bar that Loch Fyne opened earlier this year in
Wimbledon Village. This is one of the most prosperous areas on the planet,
replete with chi-chi fashion boutiques, astronomically priced childrens'
clothes shops and organic delicatessens.
Even so, one local blenches at the price of Dover sole, admittedly one of the
most expensive on the slab. All of which is line-caught or extremely fresh,
of course - never frozen.
The bar is a joint venture between Mr Derry's chain and the now unrelated Loch
Fyne Oysters. The latter supplies fish to the restaurants, which have the
right to the Loch Fyne name. The produce is sourced almost entirely from
Britain, much of it from the loch itself. They have, for example, the rights
to almost everything caught by a day boat operated by a father and son
outfit from Looe in Cornwall.
Mr Derry's career in catering started at Whitbread, which owned chains such as
Café Rouge and TGI Friday's, where he worked for a time, and was a forcing
ground for many subsequent entrepreneurs. It progressed in 1997 with the
sale of Country Style Inns, which he had acquired for his then employer
Glenchewton, which distributed cookware.
He and another former employee, Ian Glyn, teamed up to find a venture in the
restaurants field. “Everybody was doing pizzas. We thought, how many pizzas
can people eat? There was an issue in steak or meat with BSE.” Prompted by
his wife, Sara, and by holiday memories of plates piled high with fruits de
mer on the west coast of France, he plumped for fish.
“Ian and I were looking for sites for our own seafood business. Johnny Noble,
the founder of Loch Fyne, found out. He phoned us up and said ‘let's do it
together'. Ian and I put in a little money - not very much, I think it was
fifty grand each.”
The rest came from friends, colleagues and other investors. Many of these,
such as Lord Cadogan, were drawn from the contacts book of the eccentric
founder, a man for whom few have an unkind word, who died in 2002.
They managed to raise the rest of the £1.4 million needed for the new company,
Loch Fyne Restaurants. There were already two restaurants outside Scotland,
oddly situated in a rough area in Nottingham and in a small village outside
the city. Neither was a conspicuous success. The village site was a
converted cowshed, as was the original Loch Fyne restaurant; as to the city
site, Mr Derry says, “the thing that struck me when we first looked at it
was that it hadn't gone bust”.
The first new outlet was in Cambridge. Further expansion was fast. Too fast.
“We were opening restaurants so quickly, hiring managers, putting them in
along with new staff and saying, thanks, cheerio, we'll be back next month
to pick up the money. It doesn't work like that.”
In 2005 the company announced a strategic review, “which is a euphemism for
saying we're up for sale”. Venture capital firms formed an orderly queue and
Hutton Collins, run by former bankers, was successful.
At that time the business was worth about £33million. The next year Mr Derry
engineered the £3million purchase of Le Petit Blanc, which had its roots
with the restaurateur Raymond Blanc but was deemed too small by the venture
capitalists, to create his own independent chain, Blanc Brasseries.
Last year, in an unexpected move that did not entirely suit the venture
capitalists, Loch Fyne Restaurants was bought by the brewer and pub operator
Greene King. This was seen as a defensive move. The smoking ban was
threatening the pubs trade and most operators were aware that large swaths
of their estate were probably no longer viable.
A number of Loch Fyne's restaurants had already been converted from pubs -
one, in the Surrey commuter town of Cobham, had been managed by Mr Derry in
his previous incarnation as a publican. The hope was that various Greene
King pubs among its 2,500-strong estate might go down the same route.
“I hadn't seen any of them, except to have a pint in,” Mr Derry says. “But I
have faith that they know what they are doing.”
As well as supplying potential new sites, often the most difficult task in
building a restaurant chain, Greene King provided the sort of back-house
support - human resources, IT systems, “all the stuff that big businesses
have that small businesses don't” - that the chain was starting to need.
Greene King paid £68 million, seen at the time as a high price. The VCs,
however they may have grumbled, got their exit after two years. Loch Fyne
now has its eyes on its first site in the City in Gracechurch Street.
Is this not time to slacken off? Restaurants are, after all, one of those
items of discretionary spending that are the first to be cut out of the
household budget. “At this stage, no,” he says. “Perhaps people will be more
inclined to eat out less or spend less. I don't really believe they will
stop eating out. We're not immune. But within this business we have a huge
degree of flexibility. We can change menus overnight, we can change
pricing,” he says. “You've got to roll your sleeves up and get stuck in.”
Mr Derry was raised in Crieff, Tayside, where his father worked for Bell's
whisky. At school he was “a truly awful student” and his first part-time job
was putting up fences on farmers' land. After a management training course
he found himself, at 19, overseeing 60 staff supplying off-licences in
Glasgow. After 18 months of that “I started work on an oil rig, because I
thought it would be safer”. One senses that he is only half-joking. From the
rig - “a month on, a month off; it was well paid but grim” - he wrote off
for various jobs and landed one as a sales rep at Whitbread.
He ended up in marketing, spent time in New York and then was put in for a
three-day management assessment. It was a disaster. “I came out of it and my
career was pretty well over.” Thus pubs, and then fish.
Mr Derry says: “There's a lot of propaganda in the fish business, which is not
brilliantly understood. There's absolutely no point in selling the last cod
on the planet. People have to be more open-minded about farmed fish.”
The farms acquired a bad reputation in their early days for overcrowding and
over-use of chemicals. “But if you do it well, there's a real impact on
price. There's a balance between that and properly managed wild stocks.”
He recently received a most alarming letter from a customer. “My wife died at
your restaurant on Friday.” Golly. Plus: “The oysters weren't as big as she
had expected.” Were the two somehow linked? It was a typo. He meant “dined”.
Says Mr Denny: “You don't get many complaints letter like that.”
Mark Derry
Born June 7, 1960, in Hereford
1983 Marketing director, New Ventures Group, Whitbread
1994 Joins Glenchewton, leads acquisition of Country Style Inns
1997 Launches Loch Fyne Restaurants
2003 Buys Le Petit Blanc from the administrators
2005 Sells Loch Fyne to Hutton Collins
2007 Loch Fyne bought by Greene King
