Merger men

It’s a Thursday morning the week after Hotelympia and Jestic directors Michael Eyre and Martin Beesley have been examining the stack of sales leads generated at the show.

It proved to be a bumper exhibition for the company and one that was timely for a number of reasons, not least because Jestic has scaled up its business inside the last four months.

If you hadn’t caught wind of its dealings at the tail end of last year then the company purchased the distribution division of Croydon-based ServEquip.

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The pair don’t wish to say how much they paid for the business but it’s clear that it represents a major milestone in the firm’s short but successful seven-year history. “From a turnover point of view it takes us from around £5m or £6m a year to £10m-plus, so it has almost doubled the size of the business,” reveals Beesley.

Jestic had been in the market for an acquisition for some time, even moving to bigger premises last year with future expansion plans in mind. When the chance to acquire ServEquip arose, Beesley says it was too good an opportunity to turn down.

“I think you need to get the business to a size where it is safe and we relied very heavily on some of the national accounts before. Through acquisition we have reduced our reliance on some of those and made the foundations of the business a lot stronger.”

Indeed, while the deal provides an added revenue boost that takes the company to another level, there were other factors that attracted it to the business, including the brands ServEquip worked with and the end-users it served.

As a result of the merger, Jestic has gained a lucrative national contract with fast food chain KFC, while suppliers such as COF, Egro, Ugolini, Frigomat and Henny Penny have all moved across to the company, taking the number of brands it represents to 18.

“The biggest brand — I guess you could call it the jewel in the crown really — is Henny Penny, which is one of the largest still family-owned manufacturers in the States,” says Beesley. “All the brands fitted very neatly into the portfolio of products we already covered, so there weren’t too many conflicts.”

If that wasn’t enough, the deal also saw Jestic buy a 50% stake in ServEquip Assistance — the remaining part of ServEquip following the disposal of the distribution division.

ServEquip Assistance, which specialises in service and maintenance and employs more than 30 full-time engineers nationwide, continues to be led by ServeEquip founder Ray Cumbo, who incidentally gave Beesley his first job in the foodservice industry 30 years ago. Jestic will now put all its service and spares work through the operation, reducing its dependence on third party service companies. At some point in the future, it also intends to increase the 50% stake in the business it already owns, confirms Beesley.

The investment in ServEquip Assistance carries even more significance in the context of recent high profile additions that Jestic has added to its portfolio, such as Italian custom cooking suite specialist Marrone and its blast chiller compatriot Irinox.

Jestic’s assurances over its ability to be able to service and support equipment from both of those brands in the UK invariably helped it to seal the deal in both instances.

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With the acquisition of the distribution business bringing new sales, administration and warehousing staff to the company, Jestic’s headcount has now risen to almost 30. While it has had to undergo an extensive integration process in recent months, it is not something that appears to have fazed the company.

“I think the biggest challenge has probably just been the product training with the sales guys because we’ve had to get that up to speed very quickly,” notes Eyre. “We needed to train our guys on the new products and train their guys on our products. Everything else we are used to, which is bringing in and dealing with full containers coming in from America and overseas because the logistics of the business were already in place.”

Given the success Jestic has had with the Josper charcoal oven, and the fact its customers include everything from QSR chains to Michelin-starred restaurants, it’s perhaps no surprise that other equipment brands are keen to tap the company’s market development skills.

Quite whether they’ll get anywhere so soon after the biggest strategic move in its history looks unlikely. “I don’t think we will be looking for anything new for some time,” admits Eyre. “We really just need to concentrate on developing sales for the brands we have got, introduce our existing customers to the new brands, and vice versa. It is time to sit down, take stock and consolidate for a while.”

Dispelling dealers’ concerns

There is a perception among some dealers that Jestic operates exclusively as a direct-selling organisation, and with only 30% of its sales generated through the dealer channel it’s not particularly hard to understand why.

But that doesn’t mean the company isn’t dealer-friendly. Far from it, in fact, says managing director, Martin Beesley, who is keen to set the record straight. “The split [between direct and indirect sales] is what it is, but as a business we recognise dealers as good working partners and we want to develop and encourage that. Out of that 70% [of direct sales], you have got the likes of Domino’s, KFC and Zizzi, so we are still driven by key national accounts and those types of accounts have to buy direct.”

Jestic says that dealers are welcome to use the equipment testing facilities at its on-site kitchen any time, while it says that new brands in its portfolio, such as Marrone and Irinox, lend themselves to dealer sales.

So what is Jestic’s message to those dealers that have maybe shied away from working with the company?

Product director, Michael Eyre, responds: “I’d say give us a try, things have changed, we are trying to be as dealer-friendly as possible. We are very loyal to the dealers we work with. We like to be seen as a good resource for them and they can bring their customers to our test kitchens. With Josper and Irinox we are constantly doing demonstrations in the kitchen with dealers and their customers, and we want to encourage more of that.”

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