Creating Australia’s first billion dollar restaurant group
CEO of Urban Purveyor Group, Thomas Pash lets Danielle Bowling in on his plan to create Australia’s first billion dollar dining business.
With brands including Bavarian Bier Caf, Sake Restaurant and Bar, Munich Brauhaus, Fratelli Fresh and The Cut, Urban Purveyor Group (UPG) has grown to become one of the country’s largest hospitality groups since its inception in 1976. Its growth has accelerated rapidly over the past 18 months or so, following the appointment of CEO Thomas Pash, and the company’s acquisition by private equity firm, Quadrant.
Today, UPG has over 2,000 employees and boasts revenues in excess of $200 million.
“When I started with the company, what I liked was that there were several amazing brands that I thought could be grown throughout the entire country, from city to city and state to state. So we went on the road to pitch it to private equity investors, because John Szangolies (UPG’s founder) was looking to get out, and there was a lot of interest in the ability to take this platform and build Australia’s first large scale casual dining group,” Pash told Hospitality.
“We did a five year plan when Quadrant acquired us, and we want to be the first ever billion dollar dining group in Australia, and to really focus on having some of the best dining brands, in whatever category they operate in.”
Sake, Double Bay
Investing in quality casual
When the company was acquired in November last year it comprised 19 venues, and it now has over 30, with the expansion plans only ramping up over the next few years.
A significant amount of investment will be placed in the premium casual and fast casual sectors, which Pash feels currently represent the biggest opportunities in Australia’s foodservice industry.
Certain UPG brands operating in this space, he said, have the potential to boast up to 100 sites in five years’ time. This includes Sake Jr – the more casual, on-the-go sibling to Japanese restaurant brand Sake, – where customers design their own noodle- or rice-based meals by selecting from a range of proteins, vegetables, sauces, toppings and garnishes.
There’s also Fratelli Famous Pizzeria, which was launched after UPG’s acquisition of popular Italian restaurant brand, Fratelli Fresh, in April. Like Sake Jr, Fratelli Famous Pizzeria is based on customisation, giving diners the choice between two sizes of pizza and three hand-stretched doughs, over 30 toppings, six different cheeses, more than 12 different proteins and a range of sauces.
Pash’s enthusiasm for the fast casual space is driven by the segment’s enormity in the States, where he’s previously led a number of private equity and venture capital funded start-ups.
“Looking at the Australian market, it typically lags behind the US and the European casual dining sector by a couple of years, so we can really look and see what the top concepts in the US and Europe are and say ‘OK this is probably where foodservice is going in Australia’, and so we really like casual, for a lot of reasons,” he said.
“Globally, we’re seeing a decline in fast food because people are getting a little smarter and a little more educated about what they’re putting in their bodies; they expect a better meal and better ingredients. You’re seeing a lot of that sector declining. And then with fine dining and white tablecloths, you’re also seeing that sector slowing down a little bit. But if you look at fast casual or full service casual, you’re seeing those markets continually grow, typically by three to five percent year over year, and we like that growth.”
Pash is pretty relaxed about the definition of fast casual, listing home delivery, a shopping or dining precinct location and/or restricted floor service as key characteristics.
“It’s just a convenient format where you can get a great meal – a meal that you could almost have in a fine dining restaurant – but you can get it in five minutes, and potentially eat that three or four times a week. It’s about having the high quality ingredients of a fine dining or premium restaurant, but in a convenient format that fits into your busy lifestyle.”
Apart from being on-trend, the fast casual sector is far simpler and more profitable than the more premium end of the market.
“From your design, to getting it open, it’s much easier. It’s less capital intensive than a full service, sit down restaurant and you can also have highly cross-trained staff … that do front of house and back of house, or that do the counter and the kitchen, so it really reduces your labour and your man hours quite a bit. Also, you don’t have that real dependency on executive chefs; you really don’t need them for these types of concepts.
“There’s just a lot more flexibility in regards to hiring and training and what the skill set of your staff needs to be,” Pash said.
Understanding your customers
Pash has spent the 18 months he’s been living in Australia learning about the challenges, opportunities and nuances of the local foodservice market, and while some things are vastly different here – “It takes twice as long to open a venue than it would in other parts of the world” – there are a few similarities between Australia and the US.
One example is the diner’s growing appetite for customisation.
“What’s really popular now is the build-your-own movement, where the customer has the flexibility of being able to build their own pizza, bowl, salad or burger. The customers really like to be able to have a customised experience,” he said. “They are smarter than ever, they’re more educated than ever, they know what they like to taste, and they know what makes them feel good or feel bad, so being able to customise your meal is a big trend right now and it seems like it’s only going to get stronger.”
El Camino Cantina
Already a well-established and extremely popular segment of the American hospitality sector, another observation Pash has made is Australians’ acceptance of chains.
“There haven’t been a lot of chains here before – businesses that are really giving customers a quality experience, and giving them consistency. We’re seeing that customers have responded really well to that here. When I was throwing up some ideas early on, people in the industry were saying ‘Australians don’t like chains; it’s a different culture here’, but we’ve seeing it embraced as we’ve rolled concepts out and as we’ve gotten better at it,” he said.
UPG is using more than just Pash’s familiarity with the US market to bolster its growth. The company invests heavily in technologies that help it to understand the behaviours and preferences of the people that frequent each of the group’s dining brands.
“We know our customers really well. We use partners like Quantium (data analytics) and Deep in Data and we do a lot of competitor analysis. We look at our customer segment pretty closely and we think we’ve got it mapped out pretty well by brand. So we know where the bulk of our customers are coming from for each brand and whether they’re single professionals, a working family, or ‘the boys’. There are about 10 categories that we use to define our customers.
“We know which other restaurants they go to, what other stores they go to, we know where they typically live and typically work, how often they frequent restaurants, we know which gyms they typically work out at, we know when they watch TV, when they’re on the internet.
“We look at end brand and each customer segment individually and really try to get as close to them as possible and know as much about them as we can. It just helps us to make sure we can give them what they want, and it also helps us with our marketing spend, so we can make sure we’re spending money where they’re going to see it.”
UPG has a national brand general manager in its ranks but then has a separate marketing team and culinary director for each concept, to help ensure they’re offering an authentic and on-trend experience at each venue.
Sake, The Rocks
Surveys sent out to customers thanks to data that’s been pulled from a sophisticated POS system also helps the group to ensure its menus reflect global trends.
“Our POS system is off the shelf, but we’ve customised it quite a bit. We’ve built what we call a data integration layer that sits above all the systems, pulls the data and allows us to slice and dice it.
“Some data comes from our financial system, some comes from our POS system, and some comes from our ResPAK system and it allows us to look at different patterns and trends. I think we’re one of the first in Australia to do that, but it’s something you see a lot in the US market, especially in this sector.”
The perfect storm
The biggest difference between Australia and the States is, of course, population. So is Pash worried about market saturation? Are there too many businesses here, in relation to mouths to feed?
“No,” he said. “If you look at the dining out trend, it continues to go up, especially if you look at per capita here in Australia. It’s going up faster than anywhere in the world, really. People are eating out more, they’re cooking less, plus they have multiple formats now. They’ve got folks like Deliveroo, foodora and UBEReats, which are actually driving quite a bit of business for us … So you’ve got amazing companies out there that are giving customers a very good experience at home, and of course people are just dining out more. If you look at the growth in people dining out in this country, it is outpacing the number of new restaurants that are opening.”
With this in mind, Pash says the stars are aligning for UPG: it has the capital from Quadrant, a hungry, educated customer base and a number of promising brands that show considerable potential for expansion.
“We’re just getting started in growing our brands; some we believe could have more than 100 openings over the next five years.
“Australians by nature have always been a little smarter as far as [appreciation for] quality ingredients goes. They’ll pay for quality, whereas in other parts of the world they won't. There’s a psychological barrier in some markets for what people will pay for quality,” he said.
“We really think the perfect storm is coming together for us. We have some amazing brands and we believe that customers really get what we’re trying to do. We feel it’s coming together at the right time for us, and that we can execute the strategy and achieve what we want to achieve.”