Strategy & Operations » Leadership & Management » Interview: Eat CFO Strahan Wilson

Interview: Eat CFO Strahan Wilson

Eat CFO Strahan Wilson discusses the pressures of London’s food-to-go market and building up a finance function’s IT capabilities

IT’S now become very difficult to move more than a few hundred feet in London without finding an Eat. Along with Pret A Manger, Upper Crust, Itsu, Wasabi, Caffé Nero, Costa, Leon and Starbucks, it has your lunch well and truly covered. Of course, with such an active and well-subscribed market, there comes a point when one has to look beyond the M25 – something that is increasingly entering the thoughts of Strahan Wilson, Eat’s CFO since December 2013.

“If I were starting a new business, it’s not an area I’d choose to go into,” Wilson admits with not a little dry understatement.

The competition is fierce. Eat operates more than 100 outlets throughout the UK, overwhelmingly concentrated in London. Pret A Manger boasts 240. Costa has 1,755, with another 150 planned this year. But Eat has grand plans of its own, and aims to double in size in the next three years and do so without expanding Wilson’s team – currently 20-strong, with an additional ten in IT. And it’s the radical overhaul of the chain’s IT systems that will allow it to grow without expanding the finance function.

It’s a good thing, then, that Wilson is well-versed in the market, having spent most of his career at Yum! and Burger King. In conjunction with his chief executive and former Costa managing director, Adrian Johnson, he and private equity owners Lyceum have assembled a battle-hardened executive team.

“One of the first things I did when I arrived here was to refinance the business to gear us for growth,” Wilson tells Financial Director. “We’ve now raised sufficient financing to double the size of the business, so we’re looking to open 100-odd units in the next three years.”

There will, he says, be a “bias” towards central London, but Wilson is determined the business will become a household name throughout the UK in that time.

“At the moment, we have about 90 of our stores in London, and about 20 outside London. Clearly, the brand is well-known in London and therefore it’s easier to grow in London, so that’s the bias. Ultimately, we want to become a truly national brand,” he explains.

Chaotic processes
Upon his arrival at Eat, Wilson has found a business rapidly outstripping its finance capability, and so before he can approach the challenge of expanding in the UK, he first has to complete the job of modernising the finance function, starting with moving things from spreadsheets and files onto a more sophisticated system.

“Eat was founded by the MacArthurs and run by the MacArthurs, and, like all entrepreneurs, they were focused on growing the business and not necessarily on building world-class processes to support that,” Wilson explains. “That has its pluses and minuses. The plus is that it’s very fleet of foot, and the negative is that it’s perhaps a little more chaotic in its decision making than is healthy.”

That set of priorities had led to a manual and spreadsheet-based system which was still operating when Wilson arrived last December.

“The finance function I inherited was very much the output of that,” he notes. “There was a lot of manual process; there was a lot of things done because they made it work without really considering the efficiency of them. The biggest issue of all was the planning function, which – like many finance functions – was Excel-led. While the company had evolved over time from a one-store business to a hundred-store business, that function hadn’t really evolved to the complexity we needed to understand. Imagine trying to run 100 stores from spreadsheets.”

And so, Wilson set about bringing the finance function at Eat into the information age with the implementation of a business IT package.

“Everything needed at least 100 tabs because we needed one for each store. It was impossible to manage the data; it was impossible to change it; it was impossible to integrate it; and there was no way we were going to double the size of the business and support it with that planning system. It just was just never going to happen,” he recalls. “So we went out to tender, got Anaplan in and we’ve built a model that is scalable to our requirements.”

Calm before the storm
With the basics in place, Wilson describes the function’s development stage as “the calm before the storm” as he sets his sights on more ambitious ends. The focus for this year, he says, is the refurbishment of the company’s estate.

“Part of the refinancing was to raise £12m for the estate, and we will complete that by December. From a finance perspective, that’s pretty easy because it doesn’t really change anything. It just makes the sites look nicer. It adds a bit of capex, but nothing out of the ordinary,” he says.

Beyond that, a new store programme will begin and the growth in earnest in the rest of the UK, and eventually overseas.

“We need to get ourselves set up for growth now, while the refurbishment is going on,” admits Wilson. “We need to look at our processes, look at our reporting, look at our planning, and say, ‘We need to be running at full steam’. So when these stores start coming on at three or four per period, they can be brought into the system for forecasting and analysis and reporting without having to invest huge amounts of energy in getting the data out.”

And while the refurbishment is taking place, both in stores and in-function, Wilson will turn his attentions to external challenges, come the new year. That move will happily bring some blessed relief from the costs of being in London, but it will bring with it a slew of other tests.

Rent for each London store comes in at about £200,000 per annum, then there are wages for shop staff, business rates, utilities and other associated costs. Running these shops is far from easy on the bank account. Indeed, a fit-out for a new store comes in at about £500,000 – give or take – making the estate by far the most capital-intensive area of the business.

“It’s a massive drain and I am amazed at how creative the London food market is, given the fact that it can be prohibitive for start-ups,” Wilson says. “We’re regularly paying £200,000 a year in rent in our stores. If that’s your very first store, that’s a huge endeavour in London. If you do that in Scunthorpe, you’d be paying £20,000 to £25,000 for the same amount of space. It’s a major burden on the business.”

In response, Wilson says, Eat chose to use the situation to its advantage, and its proliferation throughout London and the “economy of scale” that comes with it give Eat an advantage as it looks to establish itself more widely, he explains.

“We have a very good brand awareness – 90% plus – in London, whereas outside it’ll be about 20%, so it’ll be low,” Wilson explains. As such, he says, despite the aim of developing across the country, if it came to choosing between opening a new store in Coventry or Clerkenwell, Clerkenwell would win.

“When we open up an Eat in London, it’s a known proposition. Customers know why they’re coming to us, and so when you open, you open with a bang. When you open in Coventry, you are unknown. People will come to you over time, but you’re talking about 18 months. You’ve got to be patient and persuade each and every customer that you’re a valuable proposition. You may get to similar sorts of sales levels in relation to the rent, but you’ll get there much faster in London.”

That is not a deterrent in the long term, though. And while rent and property-related taxes are the biggest challenge, expansion beyond the M25 is unlikely to present a harsher environment than it does in the capital.

“There are only so many stores you can open in London,” Wilson acknowledges. “We feel the maximum is about 200-250. What we need to achieve over the next three years is largely penetrate London and establish a credible proposition outside of London in the key cities so we can take the brand national and ultimately international.”

But Londoners’ adventurous palates and full wallets allow for greater innovation at what Wilson describes as “reasonable” rates. As such, there’s a balance to be drawn up between taking on a new area and further developing a strong offering in London.
“It’s buoyant. People love variety, and no one’s loyal to a single brand,” he says.“London is quite adventurous from a food perspective, and price isn’t actually that important to a large degree for consumers. You can charge a reasonable price and we choose to place ourselves at the lower end of the premium market. There is opportunity for innovation in those conditions.”

Sophisticated forecasting allows Eat to target tastes better than it did previously, as orders are made with same-day consumption in mind. That being the case, Wilson and his colleagues can better target particular products based on their sales.

“Our role is to leverage technology to optimise our order to match the demand that exists. We have an algorithm which the store managers use as a guide. Where we’re moving to is more sophisticated and we’ll be able to deliver more accurate forecasts, allowing users to place orders reflecting the demands of each store’s clientele, and that translates into hundreds of thousands, if not millions, in savings,” he concludes. ?


2013 – present CFO, Eat
2011 – 2013 Director of finance, Burger King
2002 – 2011 Assistant controller, director of finance, commercial director, market director, Ireland, Yum! Restaurants International
2002 – 2004 Financial accountant, Thresher Group

Was this article helpful?

Leave a Reply

Subscribe to get your daily business insights