When Mike Butt took over as managing director of Dawson Foodservice Equipment it’s fair to say the company was in a state of flux. But two and a half years down the line the Ali Group company has repositioned and refocused its business, putting the dealer channel at the heart of its strategy.
You were appointed by David Kelly (then interim MD and now non-exec director) at the start of 2010 to execute a three-year plan for the business. What was the state of affairs at that point?
The fundamentals of the business were that it was going backwards significantly — not as a result of having bad products, but due to not understanding the products and the market, and not having a team of people that were motivated and particularly well-managed to deliver that. So the challenges for us were on three fronts: our people, our customers and defining our route-to-market strategy.
Your background before joining Dawson that was in the coffee equipment industry. Did that make it difficult to get to grips with the cooking and warewashing market?
Although I had not been directly involved with warewashing, I had been in the business nearly all of my life so I understood the industry relatively well. But it was a quick learning curve trying to understand the products and where we sat in the market. It would be fair to say that the four brands we represent — Comenda, Lainox, Mareno and Rosinox — were probably recognised as secondary brands in the industry rather than primary brands, and the challenge for us was to recognise where we felt they sat.
Across the portfolio we believe we have got market-leading brands which deliver a value offering to our customers. We don’t make any sacrifices in terms of product quality, innovation or functionality. Given the pressures on today’s market it is important that we absolutely recognise where we price-position the value, not just to our client but the end-user.
You’re now into the final year of that three-year growth plan. What is your assessment of how it has gone?
We have achieved what we set out to achieve. Financially we are ahead of our three-year plan and I have to say that has really come from the support that our customers have given us. And it is fair to say that over probably a two-year period before David and I started, the business was really in a transition period where there wasn’t a lot of contact with the customers and the messages that were going out to the market weren’t particularly encouraging or consistent. So we had quite a job on our hands to turn that ship around.
What criteria do you use to measure how much progress has been made?
I think you can look at turnover and profit. We have taken our profits to a 300% increase over that period and seen a 30% increase on the top line. And that has predominantly come from project work. I made a decision very early on about the routes to market available to us. You have got direct, you have got the internet, you have got what we classify as dealers — which are the one-off, smaller buyers that are very important to us — and then you have got your scheme and project houses, such as C&C, Shine and Berkeley Projects, and you have got consultants.
The projects have been our biggest success over the last three years, and we set ourselves up for that. We invested in a project support team and we have got CAD designers here, not that we design for the end-user. We have a 100% distributor policy, which is really important to us. That has cost us business in some circumstances, but it has worked well with us in terms of that trust that you get from your partners. They know we are not going to go behind their back tomorrow and take business off them.
How much of your business now comes from project work?
Over 50%, and it will continue to grow. One thing about our 100% distributor policy is that you won’t find our products on the internet. We took the conscious decision that you can’t back both horses because we were working with a member of that society when I first started and in my first week I must have had 100 phone calls from people saying, ‘I can buy products cheaper off the internet than I can buy them from you, so where is your protection in your route to market?’ If you look at some of the players that are in the market you will find them splashed all over the internet and have a dealer route to market as well, and still manage to get away with it. I felt our brand wasn’t strong enough to support that at the time and now our brand is growing I still feel it is the wrong thing to do.
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It is unusual to hear a manufacturer make that declaration given that many suppliers seem quite willing to accept online shops selling below market price so long as they get the business…
I think we were fortunate enough that it wasn’t a big part of our business. If it had of been then it might have been more difficult because how do you go and dictate to somebody that they have got to put your prices up by 15% when they are 25% of your business? That is a bit of a different conversation, so I am just glad that I had the free rein to make that decision early on without causing too much pain to the business.
You have to manage and market four separate brands within the Dawson stable. What sort of challenges does that bring?
If you look at the market place, you have generally got ‘experts’ in combination ovens and ‘experts’ in warewashing, so from the start the challenge for us was how we become ‘experts’ in four brands rather than ‘generalists’. If we were going to be held in the same light as these individual companies then we had to deliver as much, if not more, than they do. What we didn’t want to be seen as was an importer. We are not an importer; we are the sales, marketing and service arm of those four Ali Group brands in the UK. We have to be experts in those four brands and that has required a lot of investment from us in terms of training here and in the factories.
I think we have succeeded in doing that over the last couple of years, particularly in combination ovens, which was an area that was declining quite rapidly for us three years ago. We have turned that around by nearly 80% in the last two years, and that has come from helping people understand it. If our people understand it then the customers will understand it. We have still got a way to go, but we are at a level now that I feel comfortable with and I think our customers feel comfortable with — they can trust what we are saying.
Warewashing and combination ovens are two of the most competitive categories of the market. To what extent do you get dragged into price wars and how aggressive do you have to be on price these days?
We have positioned ourselves where we know our products give a value offering, so we have done that work already. Yes, you get pulled into price battles, of course you do. And we know where our strengths are and we know where our weaknesses are, but it is not just about price. If you want something that is going to cost £500 then go and buy it, but you will be buying another one in 12 months time. It depends what the client wants at the end of the day. We know that like-for-like in what we do, we offer a competitive solution for our clients.
It sounds like the business has changed dramatically over the past couple of years. Are there any areas that still need to be addressed?
I think consultant development is one, althought we have now brought in Ian Ring [as business development manager]. It is an area that we have not been particularly strong in historically. It has not been about our products, but about having the linkages with the consultants. And people do what they feel comfortable with and what doesn’t provide them with any risk.We are actually organising a trip out to the Comenda factory for the FCSI this month, which will earn consultants points towards their accreditation, and to open their eye to see why they should be considering us along with everybody else.
The last couple of years have really been all about our bottom up strategy through our scheme dealers, now we are looking very much on a top down level as well to meet that in the middle. We are getting a fair bit of consultant specification now, but there is a lot more for us to do there. We are confident that we have got the product and the offering to give to these guys.
Double product launch to provide second-half boost
Dawson is gearing up for the UK launch of two new product ranges that it believes will find favour with distribution partners when they officially become available towards the end of August.
One of those launches involves its Lainox-branded Heart Green combination oven series, which managing director Mike Butt says will deliver “some big numbers in terms of energy savings”, while the other concerns a new selection of Comenda warewashers.
“That is going to be a very exciting new warewashing range,” insists Butt. “It is going to be extremely competitive, fantastic build quality, and some serious energy, water and detergent savings. We have done quite a lot of work in benchmarking, not just us but the factory, and we are positioning a range that is going to raise a few eyebrows.”
Dawson is promising to “take the mystery” out of rack and flight technology to simplify the offering for distributors that still do their own specification. “It is all going to be modular and be really easy for a dealer to just pick the features and see the savings and benefits they will get.”