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Business Profile: Ed's Easy Diner

By Joe Lutrario , 11-Dec-2012

Related topics: Business Profile, Business, Venues, People, Restaurants

Now 25 years old, Ed’s Easy Diner has never looked better, with strong like-for-likes and a shopping centre-focused expansion plan that is set to take it into the big league.

Ed's Easy Diner's US diner look

Ed's Easy Diner's US diner look

To say Ed’s Easy Diner is riding the wave of an unprecedented revival of American fast foods - food geek takes on burgers, hotdogs, fried chicken and barbecue dishes - is a leap too far, but as managing director Andrew Guy says, it certainly hasn’t hurt.

“We don’t consider ourselves as being in the same space as MeatLiquor and Bubbledogs, but the emphasis on upscale American food is clearly good news for us.” 

We’re sitting at the counter of the inaugural Ed’s Easy Diner (Ed’s) in Soho, central London. Overlooking the prominent junction formed by the meeting of Old Compton Street, Greek Street and Moor Street. Guy’s assertion that the restaurant is a Soho landmark is a valid one, especially seeing as it marked its 25th birthday last month. The tiny space smells of freshly-brewed coffee and slow-cooked onions. Chuck Berry’s 1956 hit Roll Over Beethoven plays and the look is timeless US diner: checker-board floor, red stools and banquettes, and chrome rails aplenty – squint your eyes a little and you could be on the set of Happy Days.

Friendly and straight-talking, Guy is a bit of an anorak when it comes to this era. Everything is nicely curated, including the original jukeboxes (20p a pop, the proceeds go to local charities) rescued from US diners, which are, rather ironically, becoming an endangered species in some areas of the country. It’s difficult not to get drawn into the experience, and a group of teenagers perched beside us appear to get it too.

Impressive backstory

Andrew Guy, managing director of Ed's Easy Diner

Guy is well placed to front Ed’s – and not just because of his knowledge of Elvis and Connie Francis. He can list numerous senior roles at themed restaurant outfits on his resumé, including The Chicago Pizza Pie Factory and two of City Centre Restaurants’ (now The Restaurant Group) key brands: Chiquito and Frankie & Benny’s.

In conjunction with chairman Stephen Greene Guy has had a highly positive effect on the group’s fortunes. Ed’s Easy Diner may be 25, but it’s only recently become a significant player in the casual space. Founded by Barry Margolis in 1987, the format expanded in London and beyond but things took a turn for the worse in the late 1990s and a large proportion of the sites closed. 

Margolis died in 2005 and the company, then down to just four sites, was held in trust for his family before being sold to London-based European property investor Rankvale in 2009 as an ailing chain with three branches in London and a site at Bluewater shopping complex in Kent.

Aided to some extent by the commercial property expertise of its parent company, Ed’s has made up for lost time with an aggressive, shopping centre-focused expansion plan that has seen the brand spread across England and Wales in locations as diverse as Bridgend, Wandsworth, in south-west London, Birmingham and Cheshire. Fourteen sites are currently trading and last year saw the group’s first franchise project launch in South Africa – one unit is up and running and another is to open soon. The numbers are healthy too. Actual sales were £9.4m in the group’s last financial year (2011/2012), an increase of 62 per cent on the previous year. True like-for-like sales growth is positive as well, up 11 per cent in the past year.

Guy believes the key driver of the group’s success is the consistency of the brand.

“It’s all in the dressing. A successful theme restaurant will consistently deliver on three things: people, product, and place. That all needs to slot together. For example, when you come to Ed’s you should be able to order without looking at the menu, the feel of the place should tell you what’s on offer. People come here because it’s a little slice of America in the 1950s, all we need to do is deliver that consistently.”

Net gains

He is quite right about customers being able to order before they see the menu too, it’s exactly what you’d expect. An extensive line-up of hamburgers takes pride of place, flanked by a supporting cast of hot dogs and chicken dishes (burgers, sandwiches and nuggets), chilli and all-day breakfasts. Desserts continue the theme – sundaes, brownies, cheesecake, waffles and pancakes. Alcohol is not a big part of the sales mix; at around 2 per cent of total group turnover – instead, the group makes its margin with comparatively high-cost soft drinks including milkshakes and ice-cream floats.

With an average dwell time of 35 minutes, Ed’s sits in a comfortable niche between fast food and casual dining. “It’s a quick experience. People come to Ed’s when they’re doing other things: going to the cinema, the theatre or shopping. A lot has been made of our decision to concentrate on shopping centres, but the strategy that sits just ahead of that is footfall. Shopping centres work well, but our sites work in transport hubs too, we have a successful site at Euston station, for example,” says Guy.

Top of the shops

Ed’s success in shopping centres highlights an important shift of attitude. Shopping-centre landlords are trying to attract a better quality of retail operator (and with that more affluent customers) with more upscale food brands. There is also greater availability of units, caused by a mixture of tough economic conditions and significant migration of some types of shopping to online – media and electronics in particular.

Fast food still dominates most food courts, an often underwhelming mix of giants and low-rent indies, so there is a lot more scope for Ed’s to grow. A handful of high-end one-offs aside, the obvious disadvantage of most shopping centres is that evening trade is severely restricted. But as Guy explains, this isn’t as big a hindrance as people think. 

“The lunch period in shopping centres extends from 11am to 5pm, so we’re consistently busy for most of the day. We also offer breakfast at some sites. But we do trade late in some locations. For example, the evening trade is very strong at our Bluewater site, which is right next to a cinema,” says Guy.

Ed’s also offsets the lack of an evening service at most sites by being smart with its use of space. Ed’s usually takes relatively small sites of between 1,500sq ft and 2,000sq ft. Back of house is unusually tiny, the group uses ‘just-in-time deliveries’ to maximise trading space, so it generally doesn’t need large walk-ins or prep areas. Only 20 per cent of the trading area is dead space (non-revenue-generating areas) compared with roughly 30 per cent in most restaurant outfits. Another benefit of shopping centres is that, in some cases, Ed’s is able to avoid putting toilets in, further maximising trading space. 

Not to be confused with US restaurateur Danny Meyer’s incoming Shake Shack, Ed’s Shake Stand format has been a surprise success for the group. Launched as an add-on to Selfridges Birmingham’s ice rink in Christmas 2011, the spin-off spawned two more units in Birmingham, one at the Bullring and one at the airport. A new variant of the format – Ed’s Shakes ’N Hot Dogs – is now trading at Bluewater and the London Selfridges.

“Like many things in life, it wasn’t strategic. The temporary stand at Selfridges didn’t do particularly well but it captured a lot of people’s interest. It’s got real potential. We’re looking at a number of shopping centres, plus railway stations and an airport,” says Guy, who has previous experience in the transport space, having worked for travel-dining giant Autogrill.

Growing places

Ten more full Ed’s Easy Diners are planned for next year (a site in Southampton’s West Quay shopping centre opens in January) along with three or four of the Stand formats. With expansion plans this ambitious, it may come as a surprise to learn that Ed’s has no private-equity backing or special bank facilities, rather a network of investors driven by board members who have all invested significant amounts themselves. Lower-start-up costs than high-street operators have also helped the expansion along, with shopping-centre sites never carrying a premium. 

Unsurprisingly, several private-equity firms have expressed interest. “The door has been knocked,” says Guy. “We haven’t needed to, we’re expanding at a decent rate without it, plus we’ve got the franchising aspect of the business. We don’t rely on alcohol sales for the business model, so we anticipate interest from the Middle East.” A British take on a 1950s American diner in Qatar or Jordan? Why not?

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