Business Profile: Red's True Barbecue

Perennially clad in shorts, T-shirts and flip-flops – whatever the weather – and often sporting trucker caps, James Douglas and Scott Munro are an unmistakable pair.

Loud, raucous and out for a good time, they know their customers inside out, not least because they are very similar to many of them. They might look out of place among the suits in a board meeting but in their fire-and-flame smokehouses they are as at home as the hundreds of hungry customers that pack out their venues on a daily basis.

Now into its fourth year of trading, it’s been “a fucking crazy few years” for the Red’s True Barbecue brand, in the words of Douglas. What started out as a single barbecue restaurant in Leeds in 2012 has
quickly grown into one of the most exciting restaurant brands of the past few years. As well as sites in Manchester, Headingley and Nottingham, the brand recently opened its first London location, in Shoreditch, and is soon to launch in Liverpool, bringing more cheer to its legions of fans, affectionately referred to as ‘believers’.

Across its five sites, it sells more than 70 tonnes of meat a month, serving 50,000 to 60,000 people during that time, and has built a reputation as a serious player in the barbecue space. Meat is smoked daily, with the kitchen in operation 24 hours a day. Food is served on a ‘when it’s gone, it’s gone’ policy, with dishes such as its donut burger having reached cult status.

Red’s debut cookbook, Let There be Meat, meanwhile, has already notched up sales of 20,000 copies and its Red’s branded range of regional US sauces and rubs – including a Kansas City BBQ Sauce and South Carolina Mustard BBQ Sauce – have been available in 547 Asda stores from July. Two more national supermarkets have been lined up to stock the range, the first stocking them from this month and the second early next year.

Yet it is the next couple of years that are likely to be the most formative for the fledgling brand. Its first foray into the capital, where it is up against barbecue big boys such as Big Easy and Bodean’s, will test its mettle outside of its northern heartland, while fresh investment will also help it meet its target of operating 20 sites within the first five years.

London calling​

With Shoreditch, Douglas and Munro have moved into southern territory a lot quicker than many other northern-based operators have done in the past, choosing to chance their arm in the Big Smoke rather than build a greater presence in the north first, as brands such as Living Ventures have. Why, then, was it in such a rush to hit the capital, already replete with high-quality barbecue concepts, when there are still many untapped northern cities in which it would most likely fly?

“London hasn’t been the pinnacle of the journey so far. We don’t think we’ve  made it just because we’re now in London,” says Douglas, who adds that the city has been part of the restaurant’s expansion plans for a while.

“We’ve got national roll-out plans,” adds Munro. “We live up north so it made sense to open first where we knew, but the south-east is as important to us as the north, as well as the Midlands, Scotland and Wales.”

The pair have had to take a different approach with their first southern site, however. “When we open sites, we are sort of introducing barbecue at a higher level than most people are used to,” says Douglas. “In London, that’s not the case. We’ve had to reset our expectations as to what we needed to get from it.

“In Nottingham, people queue for two or three hours to get a table, but we knew that wouldn’t be the case in Shoreditch. In London, there is a huge amount of choice.”

Footfall at launch has been lower than at its other sites but the pair say this has been down to factors other than London being a more mature market. Shoreditch opened its doors in the summer, a time when London’s restaurant trade traditionally slows as locals go on holiday.

“In the past, we’ve pushed the operation to the limit and made it really hard to do those volumes early on. With Shoreditch, we’ve opened a bit slower and smarter, and grown week on week. In July and August, people were away on holiday so we knew were going to have a slow start. It’s been manageable, but we are growing."

With autumn now in full swing, the pair are looking for sustained growth in Shoreditch. This will be boosted by the opening of its downstairs bar, called The Wood, which will be a music-focused venue and give east Londoners even more of a reason to pay a visit. Indeed, Red’s is looking to push the bar more at its existing sites, and in future venues, because it believes there is greater potential in having a solid drinking offer attached to a restaurant.

Size doesn’t matter​

At just shy of 5,500sq ft and about 150 covers, and space for around 60 vertical drinkers, Shoreditch is one of the bigger sites in the Red’s portfolio. Its largest, Manchester, is 6,000sq ft with 184 covers while Nottingham is also 5,500sq ft but with space for 175 covers. Headingley is the smallest in the group, coming in at just 1,400sq ft, with 52 covers.

“The first 10 sites will have various sizes. We are experimenting as we go,” says Douglas. “If you go to a commercial agent and say you’d like a site between 4,500 and 5,000sq ft in a prime location in the UK you will be at the end of a very long list of people looking for similar sites. How you get around that is to open restaurants of different sizes.”

The same applies for Red’s locations. It is as happy operating in city centres as it is in neighbourhood locations, such as Headlingley. Its Liverpool site carries on this tradition, with the pitch attached to Liverpool One, but not actually in the shopping centre. “We’re often a minute or two walk from prime locations. What we save on location we spend on fit out,” says Douglas.

This spread of sizes and locations is partly down to availability of sites, but also because the pair want to show prospective buyers further down the line that the Red’s brand can work in a number of operations. The pair have to provide an exit to their investors, many of whom are friends and family, in three and a half years’ time, and are conscious that any business decisions they make today reflect this.

“We want to prove we have a concept that can run over a number of different platforms,” says Munro. “We can show potential buyers that it works in shopping centres, suburban areas, city centres and, possibly, even overseas. We are trying to build as much collateral in the business as possible, to push the value up and turn it into a really desirable business.”

Playing with premiums​

While the pair have one eye on the long-term future of their brand they are more concerned with its immediate future. With 14 more sites needed to open to hit their target (after Liverpool), Red’s aims to open four sites a year for the next three and a half years. More are likely to open in London, with the Midlands and Scotland also on its radar.

Such growth will bring challenges, not least one of staffing. Last month, Red’s welcomed it’s 305th employee and Munro says the company hires between 40 and 90 staff per site, depending on its size. “It’s a gargantuan effort to find staff. It’s a real challenge for the industry,” he says.

Initiatives to recognise and reward the best performing staff, including places up for grabs on its annual ‘pilgrimage’ to the US for barbecue inspiration, are now in place to develop and retain staff, as is its pit-master training academy.

The bigger challenge is property. “The restaurant market has seen unbelievable growth and barbecue competition is hotting up. Finding good sites without huge premiums is hard,” says Douglas.

With Shoreditch, Red’s paid its first premium – it also forked out £1m on the fit out – and it won’t be the last the company is forced to pay as it expands. It’s a situation the pair will have to become accustomed to. “Paying £150,000 for a bunch of keys, which is essentially what you’re doing, isn’t great, but it has to happen. We didn’t like paying it, but if we hadn’t, we wouldn’t have got the site. Do you want £1m in the bank earning fuck all or have it invested in Shoreditch, where it can hopefully earn a lot more?”

Some premiums have proved too prohibitive, however. “We looked at a site that, with premiums, rents and rates, would need to take £111,000 a week to make a 30 per cent return on the capital,” says Douglas.

“That leaves no margin for error or flat periods. We’re not owned by private equity, so we can’t afford to have a site that doesn’t perform well. We have to be really careful.”

Building with its backers​

Red’s might not have the backing of private equity but it has the next best thing in the team of seasoned investors it has assembled. In May, it secured £5m of investment from a consortium of industry players​, including veteran and former chief executive and chairman at Wagamama Ian Neill; Jamie Barber, the founder of Cabana; Pho co-founder Stephen Wall; Brandon Stephens, the founder of Tortilla; Maurice Abboudi, the founder of K10; and Canteen founder Dominic Lake.

Wall has been appointed to the board as non-executive director, joining Stephens who is non-exec chairman.

“We have been in the industry three years and have no idea what we’re doing,” says Munro, who was a sales director before launching Red’s with Douglas, a former managing director of a lettings company.

“We ran the business on instinct in the early years, which is probably why it worked so well. But when we started getting more sites we wanted to bring in the guys who had made all the fuck-ups already – from choosing the wrong loyalty schemes to making bad bank deals – and put together a super team to avoid making the same mistakes ourselves. You can’t put a price on people’s mistakes.”

The company is also investing heavily in staff at head office level to augment its board signings. “In three years, we will have the most awesome team in place,” says Douglas. “We could shift up a gear and open another 20 sites in half the time again. As long as we don’t royally fuck it up before then.”

All this points to the pair not willing to give up the brand they have built – not in the short term, at least. “It could be sold to private equity or we could do what Tom Byng did with Byron or something similar to Hawksmoor (the latter was subject to a management buyout by Graphite Capital in 2013),” says Munro, “but we may want to stay on as part of the business. It’s our family, we don’t want to leave the company.”

“I’m 37 years old, Scott is 38,” adds Douglas. “We have got to the point in our lives where we genuinely believe we have the best jobs in the world. It’s not a great prospect to think of us doing something else.

“There is a lot more life in these two dogs yet. Plus, all our mates are still working, so it would be pretty lonely on the golf course.”

Red's True Barbecue is looking for chefs to work at its Shoreditch site. Details and applications here​.​