Victor Lugger: “There was way less interest in the business than I expected”
Speaking at MCA’s Restaurant Conference, Big Mamma co-founder and co-CEO Victor Lugger revealed that there was limited interest from investors in the business despite its success in the UK and wider Europe, due to sluggish demand for the restaurant sector among private equity funds.
Lugger’s comments follow private equity backer McWin’s purchase of the company in September, which valued the French-founded restaurant group at €270m (£236m).
Describing a low-key investment climate, Lugger said: “There was way less interest than I expected. I have received emails every day for 10 years from private equity firms across the globe, from the US to Dubai, saying ‘let’s have a breakfast or lunch and build a relationship’.
“Six months ago, we said we were looking for something and 90% of them did not even ask for the data. It’s restaurants in 2023 and they are not touching it. I had been told this would happen.
“So, we had less people on the start line, but we got lucky and had at least two on the finish line – in fact we had three. That helped us have a proper deal that was very satisfactory for everyone.
“Humbly, the company is doing really well, it was not a distressed deal, we didn’t have to raise the money.
“Having too much [interest] is never bad. I wish I’d had more.”
Lugger described how the investment in September replaced a seed round used to launch the group with co-founder Tigrane Seydoux in Paris in 2013.
“When we started Big Mamma 10 years ago, we were incredibly lucky to have access to equity capital investment,” he said.
“We were two 28-year-old kids looking to open restaurants and the only people who believed in us were entrepreneurs. All of them put in what was for them very little money but which raised £1.5m.
“We had 17 investors and 10 years down the road we said that if we want to keep growing without diluting our offer then we need debt – and no one would lend to us without a big strong anchor player, so we started to look to replace 17 investors with one big one, which was McWin. We were incredibly blessed to be able to do that deal.”
Building a brand
Discussing the McWin deal, Lugger said it would provide the group with a platform for expansion with plans to grow the business in Europe, the Middle East and the US. He described there being “infinite white space to grow”, with a range of offerings and price points established across Big Mamma’s locations.
“Before we launched the deal, we asked ourselves what’s ahead for the next 10 years? We’ve expanded the range of restaurants we do so we have an average spend of £27 to almost £60 in some restaurants, which allow us to do more diverse restaurants in more locations, whether that be Berkeley Square, Canary Wharf, Berlin, Hamburg, the US or Dubai. We hope we can double what we’ve done in Europe where we have 23 restaurants in four countries.
That’s still very little penetration – we have infinite white space in which to grow. We have five restaurants in London and we can double that and still be very small.”
"We have infinite white space
in which to grow"
He also said that McWin’s restaurant background and its appreciation that a brand requires patient investment was part of the appeal of the deal.
“The best thing my private equity partner can give me is money and trust. McWin’s co-founders have been doing restaurants for 30 years, they understand the importance of investing in people, food and brand over a very long period of time. They understand if you create value for guests now it will pay in five or 10 years.
“Should they have to sell they will capture way more value if our brand delivers quality because that will increase the multiple at which they sell by three or four and create more value for them than creating EBITDA by 0.5% and selling cheap mozzarella.”
Lugger discussed the forthcoming opening in Milan, which will be the second Gloria for the group, as it starts to build multi-site brands under its portfolio.
“We will have second Gloria in Milan. Gloria will exist as a brand not just a name, and we have a Circolo in Paris and London so that is also a brand, and then everything else will be new with different restaurants.
“We want to have the capacity to always innovate, for two reasons. First, it’s fun and motivating for the team to open something fully new because it fuels the passion and lowers staff turnover. Second, being able to adjust every time is the number one success factor that has enabled us to be successful in four countries.
“I didn’t have to come to London five years ago and copy and paste what was cool in Paris seven years ago.”
Opening in Milan
In October this year the group announced its forthcoming opening of a Gloria in Milan, which it described as ‘the most significant stage of a magnificent European journey’.
Commenting on the challenges of coming from France to open an Italian-inspired restaurant in Italy’s second city, he said: “We are incredibly nervous - borderline panicked. We have taken everything from scratch and asked ourselves why is it that people in Milan will want to come to our restaurant? Is it because the mozzarella sourced direct from Italy? No.
"Is it because it is good value for money? There are lots of places in Italy that are.
“Hopefully, our service style is pretty innovative for Milan and there is nothing like the vibe we do – we keep the fundamentals really strong and be best in class in what other people don’t do in Milan. If you’re good, cheap, serve food with a smile in a nice place it will work for any restaurant anywhere in the world.”
Expanding in the UK
Alongside international expansion, Big Mamma will look at UK growth as well, with sites outside London under consideration.
“Manchester is a very easy second city. There are many cities that all have their advantages and challenges. I’ve always thought it’s better to have a good team and a good spot in an average city than a shitty spot in a good city.”
"It’s better to have a good spot in
an average city than
a shitty spot in a good city"
Despite its huge popularity and buzz among diners, Lugger added that the business invests little in marketing spend, and tends to allow customers to do that job organically via social media.
“I don’t spend a dime on marketing. We only have four people in marketing, and they are all junior. I spend a lot on design - not so that people will go on Instagram but if you create a good product people will talk about it. And it happens that people talk about us on TikTok and Instagram.
“If you build beautiful restaurants people have the platforms to talk about it.”
