Business profile: Steve Hill of Wagamama

By Paul Wootton

- Last updated on GMT

Related tags: Pizza express, Franchising

Business profile: Steve Hill of Wagamama
Other brands have tried and failed but Wagamama chief executive Steve Hill believes his cult noodle chain company has what it takes to succeed in the States

If you can’t be a rock star, you may as well work in restaurants.” So says a beaming Steve Hill, chief executive of Wagamama and fan of live music.

“It is the best fun you can have. It never feels like it’s a job. It’s a fantastic arena to be in,” he enthuses.

After a decade of working in corporate finance, insolvency and retail, Hill entered the restaurant business comparatively recently, joining Pizza Express in 1996.

Still, it’s long enough for any initial excitement to have worn off. Yet he sits here now, looking like a kid in a sweet shop. And he’s not the only one, he tells me.

“Everyone who works here loves being a part of Wagamama. You don’t have to dress or act in a particular way. Providing they’re acting professionally and doing the right things, people can be themselves. They don’t have to put on a Wagamama face when they come to work.”

As a result, says Hill, “We have the lowest staff turnover we believe of our peers. And at senior management and support office level, there’s very little turnover. That’s because people buy into the brand.”

The brand was conceived 16 years ago by a young Alan Yau and it’s a testament to his visionary genius how little his formula has changed. The menus on placemats, the computerised processors for taking orders and the bench seating, we take for granted today. But back then, in Wagamama’s first site in a basement in Bloomsbury, all of that was quite revolutionary.

While Hill stresses the importance of keeping the concept fresh, he’s aware of the dangers of meddling with it. “You have to retain the core of the brand,” he argues. “We’re about fresh, quality, nutritious food served fast in great surroundings by people who enjoy their job. The challenge for us is to retain all that and offer it to a lot more people.”

Wagamama operates 60 sites in the UK and two in the US, with 35 franchises around the world. Hill believes there’s scope for more than 150 sites in the UK, and in excess of 500 in the US.

Germany is another market it is looking at. “It’s got 30 to 40 towns or cities with a population in excess of 300,000. It’s very comparable to the UK but about 10 years behind in terms of dining out.”

But that remains on the back burner. Right now, in terms of expansion abroad, it’s the US Hill wants to crack. He’s aware of the difficulties. Many have tried and failed, including Pizza Express, for whom Hill has immense admiration.

“In terms of helping the industry grow up, what the directors at Pizza Express did in the 90s has paved the way for companies like us,” Hill states.

“And it’s no surprise that most of the senior people in our industry have come from Pizza Express. It was the training ground. It transformed this level of mid-scale dining.”

Hill proudly describes Wagamama as “the Pizza Express of our day” but he’s determined his company will enjoy greater success abroad. “I would say 95 per cent of what Pizza Express did was on the money. But internationally I think they executed very poorly.”

In particular he suggests their choice of franchise partners could have been more rigorous.

By contrast, Wagamama has a “very sensible franchise operation” and has never had a franchise partner that failed. When he explains the vetting process, you can understand why.

“We look at what operations they execute in their market, how much experience they have of franchising, what their management structure is, what their funding structure is. We act like a bank. Then, together, we do a feasibility study into their market. Lastly, we look them in the eye. We ask ourselves can we work with them, can we trust them. If we can’t, we don’t do a deal. You have to pass all three tests.”

The process can take up to 18 months but the results speak for themselves. A site in Zurich did
over £40,000 worth of business in its first week – not bad for a new brand in a new territory.

The benefit of franchising is that the local partner can tailor the offering to its market. Some of the dishes might change. In Dubai, the seating is padded because “the dwell time is longer and people would probably refuse to sit there if you didn’t”.

But they’re minor changes. The core elements of the brand always remain. “Choose your franchisees wisely,” advises Hill. “They pay you and importantly they execute your brand.”

While Pizza Express entered into a joint venture when it took on the US (its partner later went
bankrupt), Wagamama is going it alone. In April 2007 it opened its first site in Boston, followedthree months later by one in Cambridge.

“Both restaurants have been cash positive from day one. But we don’t think that we’ve got it right yet.”

From the start the company decided to replicate its UK offering in the US and see what happened. Some of those things you might have thought would need to change have never been an issue, says Hill. “We’ve never had a complaint about the size of our portions. We’ve never had a complaint about the spiciness of the food. But there are things like the softening of the seats, so there will be a number of changes to cater for the local market.”

But the process of evaluation is not complete. A third site will open mid-February in a mall in
Boston followed by a fourth in Washington mid-May. Each site is quite different in terms of location.

“We will then say what we’ve learned and consolidate what we’ve got,” Hill concludes. “We’re
going to take our time to tweak it slightly and make sure we have something that can be rolled out quite quickly. Plus, with the economic climate in the US, it’s not the right time to be throwing cash at it. So we’ll take a cautious approach.”

If the US is successful, the company will investigate Germany and look further afield, possibly even to China. “It’s coal to Newcastle,” admits Hill, “and it won’t be within the next five
years – but they love brands over there.”

Meanwhile in the UK, expansion continues, despite the challenging economy. “It’s an
interesting time but our business is very strong,” states Hill. “We’ve got positive like-for-likes and I don’t think everybody can say that. But no matter what happens we won’t compromise on the quality of the food, affect the speed of service or chintz on the maintenance of the restaurants. What you want in uncertain times is to keep your nerve, continue to do what you`re doing, look to build on sales and come out of it stronger. I agree with Paul Campbell [of Clapham House Group] that it’s about spotting the time to press the accelerator. That’s the key.”

This profile first appeared in the November issue of Restaurant magazine

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