News from IndiCater
"You have to be prepared to change to be successful"
Entrepreneurs Forum Special Report
“Restaurants ARE entrepreneurial, they have to be. They work best when there is somebody who can do what they like on a daily basis with their customers and are not dictated to.”
Des Gunewardena, chairman and chief executive of D&D London was guest speaker at the EP Entrepreneurs Forum, sponsored by IndiCater, held at 1 Lombard Street Restaurant this month.
Throughout this career, Des has been involved in entrepreneurial businesses working with two of the great entrepreneurs of our time – Gerald Ronson and Sir Terence Conran. He established D&D London through an MBO in 2006.
Having joined Conran during the 90’s, Des helped to develop the business from a £10 million turnover business to a £150 million worldwide operation employing 2,000 people.
- In 2004, when Terence suggested scaling back growth, Des was sure that he could build a high end international restaurant business and it was agreed that if he could get funding, a buyout could take place.
- This was the beginning of D&D London, and since the MBO the business has grown, both in the UK and internationally, from 20 restaurants to 30 restaurants, in addition to developing a hotel in London’s Moorgate. A 50/50 joint venture has also been setup with Anna Hansen to create the Modern Pantry.
- D&D currently employs 1,500 staff and has a turnover of £80 million and is planning further growth, including more international operations, over the next five to ten years.
So what are his views on entrepreneurialism?
“The best time to build a business is in a recession, so you can enjoy them during a bull market.”
Entrepreneurial v. non-entrepreneurial businesses:
“The assumption is that being an entrepreneur is good, but this is not always the case. In some situations you need stability.”
“Our business model is about creating independent businesses and we aim not to manage our businesses too much, but prefer to mentor and give feedback. When things are not going well, then we intensively manage them.”
“The challenge is to recruit entrepreneurs who are going to manage their businesses and, in turn, managing them.”
Attitude to risk changes as a business evolves:
“Now there is a board for D&D and there is an attitude to risk that is different, but we are quite happy to take calculated risks.”
Be prepared to do quirky things:
“We opened a nightclub in Paris, developed by the people who created Fabric in London, playing house music. It was a 50/50 joint venture. However, unlike London where the club would be full of professionals, the club attracted young people with no money. It was a massive failure.”
Does being an entrepreneur lead to holding on to businesses longer then others might?
“Yes. This is probably a personal weakness, and at times there have been projects which we should have exited but chose not to. However, in places where we have persevered, such as Paris, it has paid off. The key lesson for me was that you have to be prepared to change to be successful.”
You ran the Great Eastern Hotel as a joint venture previously. Would you have a joint venture again?
“I don’t mind JVs but you must have control of the areas that you need control of. You also need JVs with people who will be around for a while.”
“The product of the Great Eastern was a restaurant driven hotel. So we thought people, public spaces, life and energy, rather than room sales. This paid enormous dividends ultimately for our shareholders.”
What is the scale you adopt for taking a risk, is it 50/80/90% certainty?
“It depends how much you are investing. We had an event space in New York and had to decide on a £2.5 million investment to increase capacity and develop the space. It was a massive risk that it would not work, but we did it and it was successful. If I was less than 50 percent sure then no we would not do it, we are not gamblers.”
Is gut more important than corporate planning?
“Gut decisions still need to be informed, rationalised gut decisions.”
Within your board structure, who is the conscience of your company?
“You do not want everyone to be an entrepreneur, a business needs checks and balances. In our company it is the FD, his glass is half empty. But this is a very good check and so are non-executive directors.”
Does equity reward come into retain entrepreneurial characters?
“Yes, and we have some sites which are so profitable that it makes it hard for people to leave! It is about what people want to achieve long-term. We have had people like Chris Galvin and John Torode go off and setup on their own and they have been hugely successful, but you need people to stay. In the case of the Modern Pantry, the board members are Anna Hansen and myself so we make all of the decisions. This is a good model for us, and one that I see as being important for the future.”
Why are you focusing growth overseas?
“Overseas businesses are fun! We might make more profit with a chophouse in Basingstoke, but it is more fun to go to New York. However, you also have gain a huge amount of knowledge and can spot trends. So in New York for example it is about places, whereas London is about chefs and food. In Copenhagen we are paying €20 euro an hour for staff, but they bring more expertise and are more productive. You must also have the right partners when necessary. In Tokyo for example we have a very good JV partner and they understand the eating out scene.
You have 40 shareholders in the business, including HBOS, has this changed your attitude as a business? Do you really open things for fun?
“There is a difference between opportunities which might be fun but make no profit, versus those that are fun but we think we will.”
Is there a difference between female and male entrepreneurs?
“Although it is a generalisation, I think women are more empathetic and have a very good understanding of people and life outside business."
What are the checks and balances? When do you withdraw from a business?
“Track record is important. If we have done something similar before but it hasn’t worked, then we don’t do it. We look at results on a daily basis, but we have never closed a restaurant and don’t have a loss leader. We do have some who suggest closing, but we either change or sell. If there is positive cash flow then why would you sell it?”
Des provided a thought-provoking and absorbing commentary on his career as an entrepreneur, moving from start-up phase into an established operation. It is evident that despite setbacks on the way, an open-minded approach to learning and gaining new experiences have been central to his success and the progress of D&D London in their next phase of growth will be fascinating to observe.
All pictures Susannah Fields, Flashfields Photography