Carford Group’s Nick Oryino will take over as the new chairman of CESA this month at a time when the industry would appear to be undergoing a period of transition. But as far as his own business is concerned, an all-encompassing approach to providing commercial kitchen solutions has left the company in good shape to move forward and conquer.
You’re into the first year of a four-year business plan. Is that typically the way you operate at Carford Group?
Yes, it has been. To be honest, we didn’t get to where we wanted to in the last four-year period, and that was pretty much because the 2008 financial crisis happened. Although we still did very well and maintained our position, we weren’t able to maintain the growth that we had anticipated. We’re now in the first year of the new four-year business plan and, at the moment, we are on course for the sales growth that we were looking for. It is going to be a challenge because some goals depend on the economic market. However, as I said before the recession kicked in, and I am still saying now, the UK has got into the eating-out culture and I think that it is one of the last things people will give up.
Carford is one of the few catering distributors with a significant in-house services and maintenance team. How much of the business does that account for?
It varies a little bit each year but about 40% is service income, service maintenance and service contracts. We employ 137 people and 70 are engineers. The other 60% is from equipment projects, and within that comes light equipment and the manufactured fabrication equipment.
Is that a split you are comfortable with?
Yes, it is good for us from a cash flow point of view. When you have a very good month on projects you are talking very big figures, but when you have a bad month it pushes cash flow. However, service contracts provide regular monthly income, so that certainly helps us when it comes to bridging cash flow. We all know that cash flow is the thing that can kill growing businesses as well as ailing businesses.
Is the services side of the business growing faster than the general project side?
Generally speaking, it is easier to grow the project side. If you get the right people and the right project managers you can grow project sales without increasing your overhead cost. With service it has to be structured growth. We could go out and buy service easily, and we could probably increase our service side by £2m without too much trouble. But you must have that infrastructure or the whole thing will collapse. The other option is to use sub-contract labour but that is something we don’t want to do because we feel we would lose the control and profit margin.
Carford now employs almost 140 staff. Do you see room to expand that further or have you reached a plateau?
There will certainly be some more growth within the sales and services staff. We are looking to do close to £14m — perhaps slightly more than that — this year, and if our plan comes to fruition over the next three years that would rise to £20m. So inevitably there will be a rise in headcount to accommodate that.
If you do achieve sales of £14m, will it be a record year for you?
Yes, it would be our highest year. Since 2008 and the years of recession we have managed to maintain our sales margin, but this will be the first year that we have significantly increased sales. We are very pleased with that.
Does your current four-year business plan contain any major changes in strategy?
No. It maintains our emphasis on working throughout the hospitality industry. One of the strengths that I think helped us through the recession was that we didn’t put all our eggs into one basket. We try and hitch our cart under the horse that is running fastest at the time, and that is what our project sales managers are trying to do. We do have PSMs that specialise in certain sectors, such as public sector or care homes, but we operate right across the hospitality industry rather than focus on one sector.
So what does a typical Carford customer look like?
There isn’t really one because, as I say, we work right across the hospitality spectrum. We will do a £5,000 B&B kitchen up to a £250,000 to £500,000 project for a fine dining restaurant. I guess a typical Carford customer would be somebody that doesn’t just look at price on the internet and says, “I want one of those”. They are looking for help, they are looking for advice, they are looking for an all-encompassing service.
Do you rely on picking up a lot of consultant-led work?
Our business model isn’t suited to lots of that. We can do some of it, but it has to be the icing, rather than the cake. We couldn’t survive with the 10%, 12%, sometimes even single-figure margins that consultant-led projects are going in at. Every man and his dog are quoting for them. On the other hand, a certain amount of that business is good for us and it is good for turnover.
How does the project pipeline look at the moment?
There is business out there but it is challenging. The phone is not ringing with clients saying, “yes, please come and see me”. You can’t just sit in and wait for the orders to fall. You have got to be in their face and try to convince them that you are the best option to use. There is business out there but it is not easy. The lead times are also much shorter. Our order book used to be a lot longer. You pretty much used to be able to see where you were you going to be 10 months down the line. In the worst part of the recession it probably went to three months and then almost off the edge of the cliff. We never fell off the edge of the cliff, but there were some nervous times when you see lead times go down that far. The shorter lead times have actually proved to be an advantage, though, because all our services are in-house. We can turn things around more quickly because we don’t have to outsource.
How important is your fabrication division to the overall business?
It is an extremely useful side of our business when it is busy. When we are involved in project work and kitchen schemes, it certainly adds value to the business. It also gives us a uniqueness that if something in a scheme changes, we can manufacture very quickly and very easily to accommodate that. The difficulties obviously come when projects are quiet because it means you have got a workforce there that principally isn’t able to make something else for somebody else. We are not able to sell that fabrication to other distributors because they tend to view us as competition and see that perhaps we would be muscling in on their sales. As far as we are concerned, we would be foolhardy to do that. You have only got to do it once and you would never have that relationship again.
Click on page 2 below to continue reading interview. [[page-break]]
As a company with such a strong services pedigree, how easy do you feel it is to retain engineers in the current climate?
We have just lost a few, but that is because of a demographic change in a large Mitchells & Butlers contract. We had an area in the Midlands, but that changed to London and the South-East, so we had a situation where the workload dropped off in the Midlands but increased dramatically in London. We had a period where we were parachuting engineers down, but engineers eventually get fed up with all that travelling, so we have had some losses and we have had to replace them by recruiting engineers in the London area specifically for that contract. But generally, we have got an extremely stable workforce. We have got a lot of people that have worked for Carford for 10 or 20 years. I like to think, or hope, that generally if someone joins Carford they either stay for a very long time — which is always our aim — or they go quickly because the cultures don’t match.
Are there any services that you don’t currently provide which you are interested in exploring?
I think we pretty much do the full gamut. We have played a little bit with deep cleaning over the years and I certainly wouldn’t dismiss that as being an area of non-organic growth that we may perhaps look at.
Does the company nail its colours to specific masts when it comes to working with catering equipment manufacturers?
We have a preferred manufacturers list, so, for example, with prime cooking equipment we tend to have three preferred manufacturers that we believe will give the best quality. One of the things distributors get accused of quite a lot is that we are not totally independent like a consultant and we only sell what we want to. I would challenge that, and I do challenge that. We generally want to give the equipment that is best for a client’s particular application. If the customer is adamant that they want a specific piece of kit, we will supply that unless we think it is a ridiculous choice and will cause them problems. In that case, sometimes we walk away from it.
Generally, we try and persuade the client to buy equipment that we can cover the warranty on because the destiny is then in our own hands. It means we don’t get a situation where a client rings up on a Thursday and says, “this equipment has broken down and the manufacturer has told me it will be Monday before I can get somebody out”. At least we can deal with it there and then.
What would you describe as your biggest frustration with the industry at present?
People selling too cheaply. Not just box shifters, even project houses. It is happening more often than in the past, particularly with regards to consultant- and tender-led projects. People are just chasing the money. It is short-termist and eventually that is going to catch you out. It will keep the bank off your back for a while but eventually when the profits aren’t coming in they are going to pull the rug from underneath you. And in the meantime it damages the market. I don’t want to see anybody go bust, but there are too many people chasing too small a market at the moment and that will right itself in some places.
Chairman’s role holds no fears
Nick Oryino took over the chairmanship of CESA earlier this month, creating a piece of history in the process by becoming the first person to have chaired both CESA and CEDA.
While Carford Group is primarily known as a catering equipment distributor, it qualifies for CESA membership by virtue of the fact that it operates its own fabrication manufacturing business at its HQ in Ferndown, Dorset.
As the managing director of what is primarily a distribution and services operation, Oryino is poised to bring a unique view of the market to his new role, but he also acknowledges that he may need to win some industry sceptics over.
“There will probably be those within CESA who think, ‘gosh, we have got a chairman for two years who is not fully understanding manufacturing’. So it will be a challenge for me to engage those people because our manufacturing facility has a turnover of about £1m, which as you can imagine is slightly different to a Falcon or a Williams. I am looking forward to engaging those people and making sure they understand that I understand their issues.”
One of the things Oryino is expected to endorse in his new role is greater collaboration between CESA and CEDA on common issues, such as technical matters and education, in order to be seen as one industry voice by the outside world.
“The one thing I can say is that I hope that my time as CEDA chair and time on CEDA council, and now my time on CESA council, has given me a unique insight into the operations and the workings and the issues and the problems of the two associations,” comments Oryino.
“Some people say my aim is to have the two associations suddenly join — it isn’t, because I think they are two different associations and there are different aspects and different thing that members want from them. But there are an awful lot of things that the associations can be doing to work together more closely. There are going to be more and more synergies as time goes on and less and less divisions in my opinion.”