It opened last month to a huge public fanfare and, for a moment at least,
retailers and investors took a sharp intake of breath. Too much had been
invested in Westfield London for Britain's biggest inner-city shopping
centre to flop, deepening recession or not.
Like anyone with a site at the Shepherd's Bush mega-mall, Robin Rowland could
have been forgiven if he was nervous before the crowds burst through the
doors, but if so, the chief executive of YO! Sushi need not have worried.
The YO! outlet at Westfield is achieving net sales of more than £50,000 a
week, making it the top-grossing of the group's 40 UK restaurants.
“The Westfield opening has been absolutely astounding,” Mr Rowland said. “To
get a 35 per cent return on our investment, we would have to do £18,000 a
week. It's very early days, but it looks like it could return 100 per cent
in the first year, so I'm very happy.” This despite the fact that the
restaurant chain has just suffered its first material decline in
like-for-like sales since he joined nine years ago.
The Westfield site is not the only bright spot. YO! Sushi has opened nine
restaurants this year and all are trading strongly, despite the gloomy
economic backdrop. The performance of the new eateries — all of which serve
food on a conveyor belt - has, to a large extent, mitigated the impact of
some of the toughest trading conditions that the company has experienced
since Simon Woodroffe, the entrepreneur, opened his first store in Soho in
January 1997.
Mr Rowland said that like-for-like sales had fallen by 6 per cent in
September. “It's the first material reverse for several years,” he said.
“Trading was softening through the summer, but in September it hit a cliff.”
Things weren't quite so bad in October and November, with like-for-likes down
by 2 per cent to 3 per cent, but the high operational gearing in the
business means that any drop-off in topline growth has a disproportionate
impact on profits. “We reckon we're still ahead of most of our competitors,
but it is still extremely distressing,” Mr Rowland said. He says that the
biggest hit has been in the capital, which accounts for about half its 40 UK
restaurants. “The North has been very strong and the new openings have
performed well, but Central London is not having a very happy time of it.”
So what about future prospects? “We'll scrape through the rest of this year in
line with our business plan, but you're absolutely off your rocker if you
project like-for-like growth next year. The good news is we've got some
great openings, which softens the blow. We see 2009 as a year of treading
water.”
Mr Rowland is budgeting for a 2 per cent fall in 2009 like-for-likes, with
total turnover expected to rise from £36 million to £40 million, and
underlying earnings before overheads rising from £8.5 million to £10
million.
With many private equity-backed buyouts struggling under the weight of debt,
it is pertinent to ask how YO!Sushi, which was acquired by Quilvest Private
Equity in March in a £51 million deal, is coping with interest payments on
its £26 million bank debt.
“We can service it,” Mr Rowland said, “but there's a question now of what
happens if the like-for-like decline hits 10 per cent. Any sensible chief
executive is running those numbers. The answer is that we can service the
debt even in a pretty grim trading environment, though it would mean we'd
have to take short-term and quite negative actions.” Despite the recent
lurch into negative territory, however, the ebullient 47-year-old said that
he remained optimistic about the resilience of his customers, about 70 per
cent of whom are female and, by implication, more plugged into the health
benefits of sushi.
“People are starting to change their habits,” Mr Rowland said. “From Monday to
Thursday, people have stopped doing lunches in the way they have been for
the last five years, but they're shifting their expenditure to the weekends.
There's the 'sod it' factor. They want to go out and by the end of the week
they can't stand it any more.”
The former Whitbread executive is used to dealing with adversity. When he
joined YO! in 1999 as operations director, he realised he had his work cut
out. “I think Simon [Woodroffe] thought the concept could work anywhere.
Before too long the bank insisted I take over and allow Simon to become
chairman. It became obvious that the best thing for him to do was what he
enjoyed most, which was talking and doing public speaking, and let me run
the business and work our way through what were tricky times.”
Mr Rowland said that some of the restaurants were in poor locations, many had
been overinvested and Mr Woodroffe had started to develop bars that,
although avant-garde, were “not set up to make money”. He spent 18 months
working with the bank to resolve these issues, resulting in impairment
charges to eight of the twelve sites and the closure of three restaurants
and all three bars.
Since then, the trend has been pretty much positive. In 2003, by which time he
had rebuilt the business to 12 restaurants, he led a management buyout
backed by Primary Capital that valued the company at £6.5million and secured
another £3.5 million of expansionary capital. “That gave us the wherewithal
to develop the business,” Mr Rowland said. In 2006, which he describes as “a
seminal year”, with like-for-like sales rising by 16 per cent, YO! received
several approaches. It opted for a refinancing, valuing the business at
about £35million.
Under the deal reached with Quilvest, management has a 29 per cent stake, of
which Mr Rowland accounts for half. He conceded that, given the present
environment, an exit was a long way off, but he remained enthused by the
potential of the brand. As well as opening up to six UK restaurants a year —
Mr Rowland's ideal estate would be 100 — YO! is pressing ahead with
franchising overseas. It has 11 outlets in the Republic of Ireland, the
Middle East and Russia.
The Holy Grail is the United States, where he has held talks with a number of
potential joint venture partners about building a chain of as many as 300
sushi establishments. Mr Rowland said he had put the plans on hold for six
months to assess the economic picture, even though the Westfield group was
keen to follow its early success in London by persuading YO! to take sites
at some of its malls in America.
Another country he has his eye on is Japan. “Japanese people are always asking
me when we're going to come to Japan,” Mr Rowland said. “They love Paul
Smith and Ben Sherman and anything that's British, even a British take on
Japanese food. If someone wanted to take out a franchise, we might just do
it.”
C.V.
Age 47
Education St Dunstan's College, Catford; Kent University and University
of South Carolina (history, politics, literature)
Career 1984-88: area manager, Whitbread Inns; 1988-92: operations
manager, Grand Met Retail; 1992-95: operations director, Scottish &
Newcastle Retail; 1996-98: operations director/franchising director, The
Restaurant Group; 1999-present: operations director/chief executive, YO!
Sushi
Family Married, with three children
