Ready to take on the world
17 April, 2011
Comment by Peter Martin
Wagamama is a case-study in how to do things properly
It may have taken a little longer than management might have hoped, but last month Wagamama finally gained a new owner in a deal valuing the Asian restaurant chain at £215m, writes Peter Martin.
Importantly, its new principal investor Duke Street committed to funding the brand’s future growth both in the UK and internationally. Part of the sales pitch had been the potential for the noodle-based concept to expand globally.
Since its creation in 1992, Wagamama has grown to 70 restaurants in the UK, three in the United States and a franchise operation with 36 restaurants in 16 countries across Europe, the Middle East and Australasia. It was acquired by Lion Capital in 2005, during which time it more than doubled in size, including opening in Boston in the US.
However, not all potential suitors once Lion decided to cash in its investment were convinced by the attraction of continuing to build an international brand presence. The UK has created some of the most innovative concepts in casual dining, including Wagamama, but few financial backers have ever wanted to support the ambitions of British brands for worldwide expansion, and in particular launching into the United States.
Cracking the US market will be a long haul. The owners of Nando’s, another familiar name over here, are said to be prepared to take a sustained financial hit to establish its States-side presence. But the seriousness of Nando’s commitment was underlined last month by founder Robbie Brozin speaking at what is now perhaps the most important US business forum, the Restaurant Leadership Conference in Scottsdale.
For Wagamama, the backing of Duke Street will see it open in Washington DC this autumn, as well as accelerating domestic growth with 12 new UK openings this year.
Critics are prone to look on international ambitions as indulgent flights of fancy by ever-optimistic entrepreneurs. There have been some spectacular overseas failures, but if nothing else they are lessons to learn from. International growth has to be properly planned and supported and won’t succeed overnight, but brands like Wagamama have good track records of getting it right in the UK, so why not elsewhere?
Wagamama is a case-study in how to do things properly, ever-since long-serving chief executive and latterly chairman Ian Neill took Alan Yau’s inspirational creation and turned it into a smooth-running machine. What genius to make a virtue rather than a problem out of serving food when it is ready rather than seeing it continue to cook under the pass lights.
Not to be too sycophantic (as he is also Peach Factory’s chairman), but Neill has also shown how to manage board-level succession seamlessly, so that he can now step down without a fuss.
It is good to see investors backing management vision, and what is so alien about wanting to build a brand that can travel? Britain is actually good at it – after all we are supposed to be a trading nation.
It will be interesting to see how Wagamama builds. Costa is already securing a real presence in Asia, and others will surely follow Nando’s and Wagamama into the States.
Wagamama will have learned from its experiences setting up in Boston, and with new chairman Martin Robinson, who is also chairman of Center Parcs and an non-exec at Euro-Disney, it won’t lack an international perspective.
We actually need a few more companies willing to fly the flag.
This article was first published in Peach Report magazine