Business Profile: Hawksmoor
The path to success is often littered with failures, and in Hawksmoor founders Will Beckett and Huw Gott’s case it involved leaving a trail of pubs, margarita glasses and Mexican food in their wake.
As the pair sit in their latest restaurant, which is not a Hawksmoor but a new style of offer, called Foxlow, it’s hard to imagine the founders of one of London’s most respected steakhouse brands having nothing less than the Midas touch. Their four-strong London-based restaurant group, which has three sites big enough to fit a small country in – Piccadilly, the City and Covent Garden – is flying at the moment. Foxlow, on St John Street in Clerkenwell, is also going great guns with 11,000 people signing up to its introductory ‘50 per cent off food’ offer within four hours of it going live.
But then you listen to them talk about their business approach, which at times has been blinkered and even haphazard, and it transpires their touch has in the past been more Conference than Champions League. There’s the story of the first Hawksmoor site in Spitalfields, for example, which they signed on before securing bank funds.
“It turns out when you’ve proved you can’t make any money three times in a row it’s enough for a bank to stop lending”, laughs Beckett. Gott was forced to go cap in hand to ask his parents to remortgage their café and home to cover the costs. It later transpired the site didn’t even have a licence to serve hot food. Or loss-making ventures Green & Red, their ill-fated bar and Mexican restaurant in Shoreditch, and the Marquess Tavern and The Redchurch, which they then owned and which proved to be a long-term drain on resources.
As Beckett sums up the pair’s early years: “It felt like any day it would all go bust and we’ll be like, ‘what the fuck do we do next?’ because we didn’t really have any actual skills. We were pretty close to going totally bankrupt.”
History has shown otherwise and Hawksmoor has followed an impressive trajectory – from one 3,000sq ft steak restaurant in a grubby part of Spitalfields to a group of desirable, high-turnover steakhouse spin-offs – since the first opened in 2006. And, far from being hapless restaurateurs,
Gott and Beckett have proven to be successful businessmen whose often unconventional approach has struck a chord with customers and staff, even if they do play down their abilities.
“Even back in 2009 when they had only Hawksmoor Spitalfields you could see how thoughtful they were about the business and how bright they were,” says Paul Campbell, founder of private investment company Hill Capital Partners and an investor and non-exec director of Hawksmoor.
“The thing that marks Will and Huw apart is that they have an obsession with the quality of the offer. I have never known two people so obsessed with every single aspect of a business – not just the food but the service, their people and ethics.”
As if to underline this, in July this year private equity company Graphite backed a management buy-out of the company in a deal that bought out some early-stage investors and valued the company at around £35m.
Considering both Byron and Côte recently sold with price tags of around £100m for their 34 and 45-strong businesses respectively, it’s a punchy valuation for a comparatively small company that demonstrates just how far Hawksmoor has come.
A new beginning with Foxlow
What makes Foxlow particularly interesting is that it marks a return to the old school-friends’ earlier approach to restaurants, one that you might have thought they would want to leave behind. “We’ve done Hawksmoor for seven years but over that time it’s developed and changed,” says Beckett. “Spitalfields was a really nice neighbourhood restaurant but when we did [140-cover] Seven Dials [Covent Garden] things went ballistic.
Hawksmoor changed to become big, buzzy destination restaurants – both Air Street and Guildhall are not insignificantly sized – but we really liked having a neighbourhood restaurant.”
With 100 covers set over two floors Foxlow isn’t exactly the bijou local restaurant you might find at the end of your road, yet it’s a noticeable change of pace compared with the company’s recent openings. The site has a brighter feel to it and the menu is less dependent on hulking great big lumps of steak – although they do still feature. Instead it is shorter with more variety, including starters such as butternut squash and ricotta on toast; and mains of slow-roasted spiced aubergine; and turkey with sausage-stuffed onion.
“Hawksmoor’s menu is not inflexible but it’s essentially a steakhouse menu,” says Beckett. “We have a little tweak when we open something new – Air Street was fish – but we felt there was an opportunity to do a load of things but couldn’t fit them in at Hawksmoor.”
“It’s a collection of things we like to eat,” adds Gott. “Then it remains to be seen whether other people also like to eat those things. But it’s uncomplicated, likeable stuff.”
With Foxlow they have also taken the unconventional – there’s that word again – step of installing a salad bar. Considering this particular restaurant feature is the preserve of a Harvester or Pizza Hut operation it’s not an obvious fit for a neighbourhood restaurant. “Whether or not to do salad wasn’t a question but whether to do a salad bar was,” says Beckett. “Is it possible to do a salad bar in a cool way or is it lost, like corduroy flares
Unlike Garfunkel’s or Pizza Hut, customers don’t get to visit the salad bar themselves but instead order a side, starter or main (£4, £7, £10) from a choice of five salads that changes on a regular and seasonal basis. “We liked the idea of bringing it back in a back in a different form and doing it really well,”says Gott. “Having lots of salad on the menu means you can have a healthy meal if you want to.”
Conservative expansion
With keen prices – starters begin at £6 (none break £9) and mains from £10 to £16 – Foxlow could be a blueprint for a new scaleable concept for Gott and Beckett. Just as Goodman is moving from opening
more steak restaurants to focus on the rollout of its lower spend-per-head brand Burger & Lobster, could Foxlow follow in its footsteps?
“The main aim was to do a nice restaurant,” says Gott. “If it goes well we may think about doing more, but if it feels like a one-off that’s fine. There was never a plan to roll out Hawksmoor at the start.”
The pair are equally opaque about the possibility of opening more Hawksmoors. “We don’t want to over-expand and have people say it’s not as special as it was,” says Beckett. “We enjoy opening restaurants, we’ve got a lot of people in the company who are quite senior and we want to create opportunities for them, and it’s not bad financially either. But we don’t want to do that by compromising how good our restaurants are.
“There’s no mileage in saying ‘there’s a bit of money in Canary Wharf, so let’s do what we did in Seven Dials there’. It might make money but it would be bad for Hawksmoor in general. But if we’ve got more demand than we can cope with and enough staff to take 80 per cent of senior positions, we could do something else if it adds to what we’ve got. There’s a nervousness in our industry that doesn’t exist in, say, fashion about growing.”
Growth is evidently in the business plan, otherwise Graphite would not have got involved, but Gott and Beckett are confident there will be no undue pressure to expand too quickly. They point to the progress of Chris Corbin and Jeremy King’s Rex Restaurants, another Graphite-owned business.
“Good investors know the right thing for a business and the right thing for the investment plan are not always the same,” says Beckett. “If Jeremy and Chris were 100 per cent sure the best thing to do would be to not open anything for the next 18 months Graphite would talk it through, but if that’s really what they felt they’d say fine. There are private-equity houses that would say ‘you must be fucking joking. You’ve signed on that bit of paper and this is the plan you’d said you’d do’, but I don’t think Graphite is that company.”
More lead to their pencil?
What Graphite does provide Hawksmoor with is an additional bit of back-up. Under the new deal Campbell remains in his role and will continue to provide guidance. It was Campbell, for example, who said: “If we sold the businesses that lost money and kept the one that made money we might actually make money”, says Beckett. “We needed Paul when we took him on. He helped us think about the business in a businesslike way.”
In addition, Karen Jones, a non-executive director at Rex, joined Hawksmoor as chairman.
“Karen is an amazing people person,” Beckett adds. “She will help us get better at our jobs. A good investor recognises you’re good at some things – Huw’s good at food and design, I’m good at the people side – and helps you get better in other areas. They don’t push into areas you’re good at. The worst thing an investor can do is sit down and say ‘here’s what you can do with the menu’.”
Given the current London restaurant market and the space in which Hawksmoor competes with its larger sites, Graphite’s involvement looks especially sound. “An issue in the restaurant industry at the moment is a lot of people are spending money on a restaurant and aren’t interested in how much money they make. We don’t have that luxury,” says Beckett.
“You’ve got very wealthy people who want to get involved as a hobby and also fast-growing chains that sign 10 leases on sites they haven’t even opened yet. The London restaurant scene is also feeding off the property scene: it’s a safe place to move to if you’re Greek or Syrian and have a lot of money to put into restaurants.
“I don’t think people can achieve a realistic return on investment [ROI] if they spend £5m on a restaurant. I was trying to do a quick ROI for three different sites in Soho the other day and couldn’t make any of them work, just in terms of how expensive it is to run a restaurant in Soho. Five Guys [in Covent Garden] cost more to set up and way more to run than Air Street – that restaurant was not opened to make money but for something else. That’s weird, right?”
Given the scale of some of their operations – Air Street in Piccadilly is a mammoth site with 235 covers, while Guildhall has 160 covers in the restaurant and 75 in the bar – and the quality of their fit-outs, the pair admit that some people lump them in the same bracket as these super-rich restaurateurs. Yet they are not in the habit of throwing money around.
Indeed, when Hawksmoor’s numbers came out in August, showing turnover for the year to 31 December 2012 passed £18m, the pair were baffled by the reaction. “It feels weird that foodie people have conversations about our turnover on Twitter,” says Beckett. “People ask us about money and when we answer they say: ‘Oh, I imagined you were Richard Caring with a mansion’. I rent a three-bed
place in Tulse Hill and Huw lives in a one-bed flat in Hackney. We don’t have a helipad.
“A national restaurant reviewer wrote to congratulate us on selling Hawksmoor. But everything’s the same. In some people’s minds me and Huw now have a big amount of money and are just mincing around doing Foxlow for a laugh. It’s not like that at all.” Well, maybe only a little bit.
