A very British revolution
Since it came back from the brink of collapse in 2006 Little Chef has been quietly reinventing itself from the ground up. Now it is back in the black, investing, expanding and exploring new commercial horizons. Calum MacLeod talks to managing director Tracey Mulligan about the sweeping changes that have breathed new life and a whole lot of ambition into this once rather sleepy hospitality brand.
Instinctively Little Chef feels like a business from another era. If you asked a dozen people about the brand the majority would likely respond with a certain amount of nostalgia, rather than referring to their current day-to-day lives. When managing director Tracey Mulligan (pictured) joined the business three years ago, she was no exception to this: "I'd been to Little Chef as a child - I'd had the lolly as a treat if I was good. It was part of the whole British social landscape. It's an iconic brand but I'd lost touch with it," she says. From the mid-1990s onwards, so had much of its former customer base.
Since that time the business went through several different owners, each of whom tried and failed to align the relatively sedate British brand with a roadside market suddenly saturated by the fast-food giants and coffee houses. Far fewer people wanted to sit down to eat so the time-poor traveller sought sustenance elsewhere. Closure followed closure until in December 2006 Little Chef went into administration - just another great British brand consigned to the commercial history books. But as the new year dawned, UK private equity group RCapital breathed new life into the business - acquiring it for less than £10 million. This turned out to be a rebirth for Little Chef in more ways than one. The slow, inexorable slide into oblivion had been arrested but the task of turning the brand around had just begun.
Fast-forward four years and the picture at Little Chef could hardly be more different. Not only is it back into profitability, but it is talking expansion, new concepts and investment - £20-£30 million over the next three to five years. They're rolling out rather slick new Ab Rogers-designed, wi-fi enabled restaurant concepts - some of which are showing a remarkable 60% growth in sales. So what happened in between, how did they manage it and what's next for this revitalised British favourite?
In talking with Tracey it was very clear that in the last few years Little Chef has taken a long, hard, unflinching look at itself to determine its strengths, its weaknesses, its market position and the perception of the brand. It has engaged in a near continuous dialogue with employees and customers alike to shape and drive the rejuvenation of the business. What has emerged is really not much short of a revolution, a very British revolution.
To gauge how and where this sea-change began we need to step back three years to when Tracey first walked through the doors at Little Chef - then as its HR director (she was made MD a year ago). "Firstly, what I found when I arrived is that the people in Little Chef are absolutely fantastic. They'd worked for many owners over many years, had very quietly got on working as a team in their restaurants, tried to deliver the best that they could, often in quite difficult circumstances. They had been doing this for years and years and were completely ignored as part of the company strategy.
"The pay structure was in disarray. There was no incentive structure. There was no bonus structure. There was really no performance culture. There was no sales culture. You can't drive a sales and performance culture unless the teams actually feel 'Yeah, I'll do that because I feel I'm part of it'."
And part of it the Little Chef teams soon were; one of the first steps in both analysing performance and engaging its employees was to ask them what bugged them about the business. Such a move is inherently risky; while everyone has an opinion, not everyone is well-informed and if you ask for feedback and then don't act on it you end up with even more disaffected workers. However, in this instance it not only provided the insight the company needed but also the opportunity to demonstrate the senior management putting their money where their mouth is (was).
What emerged from this process were not concerns regarding the grand strategic direction of Little Chef but more day-to-day issues that affected them such as pay and, as it turned out, an almost company-wide call for a new uniform. Consequently two regional managers, both former restaurant managers, were tasked with leading the redesign project taking on board the views and concerns of the people who'd have to wear them (make them smarter, they need to reflect the seniority of the individual team member, etc etc). The final designs were then presented in a 'fashion show' put on by the regional managers at the annual management conference. It went down a storm.
In and of itself a uniform redesign is a relatively mundane action but its value to Little Chef was enormous. It helped forge a meaningful bond between employees at all levels of the business. As Tracey says, "What it did was trigger the point of view 'Well actually somebody listened to what I said and they've responded'. It really helped with staff then listening back [when we said] 'Well we now want to look at how we serve customers. We want to look at what our mystery dining scores say about us'. It's been absolutely fantastic."
This collaborative, inclusive approach seems to have been characteristic of the whole brand turnaround process. It makes sense; if you need to drive change across each of the 162 Little Chef restaurants scattered across the UK's A-road network, you need staff buy-in and a sense of collective involvement/responsibility. As part of this the company introduced, with the tacit involvement of its managers, a leaderboard system to measure all 162 restaurants against a series of simple KPIs such as sales, profits, standards and mystery dining scores. Each restaurant was then assigned a score from one to five, with results published company-wide on Little Chef's internal social networking site.
The most successful teams are both celebrated and rewarded but beyond that Tracey and her team talk to them about how they've achieved such high scores and share these ideas across the business. "So rather than saying 'somebody in head office thinks this idea will work', it's about the restaurant managers telling each other," says Tracey.
"What's been absolutely fascinating is that we are using that process not just to reward and congratulate, but actually as an ideas base for the rest of the company. It's proved to be hugely successful."
But of course when you've got 162 teams competing on an even footing with monthly recognition and the internal message board as a means to interact, ideas aren't the only thing you get: you get competition. "They're hugely competitive," says Tracey.
"As soon as the results come out, the banter starts: 'I've seen you slip from a one to a two, you obviously weren't concentrating', 'I've got a 100%' - 'you couldn't have been on shift, then' etc. So there's lots and lots of this type of really, really positive banter." It doesn't take a genius to see the likely impact of this type of competition on service standards - particularly with mystery dining results such a prominent feature.
The Little Chef MD was at pains to stress the hard work they'd put in to develop a real service culture. And while all these employee engagement techniques her team has employed might all sound a little warm and fuzzy, the results are being felt on the restaurant floor. "In 2008, complaints outweighed our compliments by three to one. Now we have eight compliments for every complaint. We're not looking at it from a nice, woolly perspective [these are] our hard-core measures of customer satisfaction."
Of course for the enhanced service culture to make a difference Little Chef still needed to align their product offering with the demands of the modern market. Ten years ago around 80% of people stopped to sit down and eat at roadside restaurants. These days 80% of the market is take-away or 'grab' related. How could it compete with the fast-food fraternity? Put another way, what was the Little Chef take on take-away?
To compete, it was clearly going to have to carve itself a slice of that time-poor 80% who were eating on the move. Thus its 'Good to Go' deli concept was introduced, promising 'the best of Little Chef, hot or cold, to take out' and including bespoke butties and 'mini-meals for one'. At the heart of this food offering and indeed at the heart of the whole brand renaissance was the emphasis of Little Chef's British heritage and upon quality. Championing 'hearty, honest fare' this USP has seen the introduction or re-introduction of many iconic British products (Bangers and Mash, Hot Pot of the Day and loose-leaf tea - tea is very big at Little Chef).
"Our [food] blueprint is not going to be about being the cheapest on the roadside. But we have really, really looked at the quality offering which you can't get elsewhere. So we have very, very strong messages now about our ethical sourcing. All our eggs are free range and British. All our sausages are outdoor reared. Our potatoes are British. The quality of the food as well as the price point for us is absolutely critical, because what we're selling is not just the breakfast or the meal or the sandwich. It's the memory of 'you know what? I'm going to go back.'"
The Good to Go concept also has the potential to open a number of new commercial opportunities for the 50-year-old brand - commercial opportunities at which a good chunk of the multi-million pound investment is likely to be focused on. Tracey explains: "If Little Chef can move into Good to Go and to go into take-away, why has it therefore got to sit only on A-roads? Once you understand the consumer mentality why can't you have a drive-through? As long as your timing is right, why can't you give someone a breakfast that's freshly cooked and is part of a drive-through offering? Why can't you be in other travel locations? Why can't you be on the high street? As long as we understand the market and the consumer mentality we can take this brand anywhere."
Of course you can't really talk about the food at Little Chef without mentioning Heston Blumenthal. The 2009 Channel 4 documentary 'Big Chef Takes On Little Chef' saw the culinary magician enter the chain's Popham restaurant ostensibly to 'revamp' the environment and the menu. Almost three years on and there are distinct traces of Heston's influence but how does Tracey view the programme's impact? "It was a TV programme, and how things are depicted on the TV isn't always quite what happens in real life...[but] the involvement of Heston and his team was very powerful - actually giving Little Chef the confidence to say that if you focus on quality, and you don't get obsessed with just being cheap on price, then there is a market.
"What we've now said is 'what does the consumer say that they want to eat? What do they currently buy from us? What is the best quality product we can give them at the right price point?'"
Indeed the whole food quality process at Little Chef is set for a mini-revolution of its own in the near future, with the planned establishment of a food academy. This is partially a drive towards ensuring consistency of food offering right across the restaurant network. But it is also to provide both recognition and a development avenue for the cooks themselves.
Though still in the planning stage the idea will be to take the top 10-20% of chefs as determined by the mystery dining scores, train them in food tasting and sampling and have them go around the rest of the network training and mentoring other cooks. They will work with suppliers to develop the next series of Little Chef menus. "Ultimately," says Tracey, "my vision for the food academy is that they will be part of a very elite group that will not just design the menu but will look at competitors, will work with catering colleges about considering us as a career."
Career development seems to be a theme that is going to be explored in some detail in the years ahead by Tracey and her team. Not only are they looking to establish a graduate recruitment programme but there's also a trainee manager programme in the pipeline to train up the next generation of restaurant managers. It seems that, along with the processes, culture, fit and food, Little Chef is also seeking to re-establish themselves as an employer of choice for careers-minded professionals. Given what they've achieved over the last three years, would you bet against them?