Catering Insight caught up with company director Richard Toye to discuss what Upnorth Foodservice Equipment has in its project pipeline, how it is trying to woo consultants and why discounts from manufacturers aren’t always what they seem.
This year marks Upnorth Foodservice Equipment’s 10th anniversary. What are the company’s main areas of expertise today and how big is the business?
Upnorth Foodservice was founded as a kitchen house to design, supply, install and maintain commercial food service and refrigeration equipment. There are currently 15 staff in food service and around 60 in the group. Business has grown from its first year when it did a turnover of half a million pounds to in excess of £3m this year. It has taken us 10 years to get there, but it’s been 10 controlled years.
What do you regard as your core customer base?
We can service any client as it stands. We operate on a daily basis with everyone from the guy who owns a local takeaway up to five-star hotels and hospitals, care homes and major leisure operators. The one thing that Upnorth has been successful with is not only the diversity of product and services it offers, but the diversity of clients it deals with.
Where do you expect the growth to come from this year?
We have got a large number of existing framework agreements with local authorities for the next three to five years, a large series of hotel and restaurant developments in the north and about 10 care homes that we are involved with across the length and breadth of the country. The universities and colleges are still developing and there are a number of projects on the go at the moment, including the tail end of what used to be some of the BSF (Building Schools for the Future programme) to complete, so there is a huge amount of work. We are also busy with the final installation work at the Glasgow Velodrome for the Commonwealth Games, which has been a nice in-depth and long term project for us.
As the name suggests, your heritage has been in the North East. How much of your business comes from the region?
I think it’s about 60%. The business probably would have stayed at around £2m if we hadn’t gone beyond the region. There was always work outside of the region, but if we hadn’t actually pushed ourselves to go beyond we wouldn’t have got that extra million.
Would you consider opening offices down south?
I don’t think we need to open any other branches. We are all well-versed with travelling. The type and duration of the kitchen installation projects we undertake can be anything from a week to a maximum of four weeks on site. Yes, you may well have work that runs over a period of time but you are never going to have a continual section of work for more than four weeks. I suppose there is a possibility in the future that if we were continually spending so much time visiting London then another branch or office may be a requirement, but the transport links are good enough that I don’t think we need to.
A couple of years ago you acquired Quay Catering, a local light equipment and tableware specialist. Can we expect Upnorth to make further acquisitions or do you actually think you might become an acquisition target for somebody?
I don’t know — it would be nice to flatter ourselves with that one! I think we may well be a good scoop for somebody, but why would we consider ourselves to be an acquisition target — as a means to get out of the business and retire? I don’t think we are ready to retire yet, we have still got a lot that we want to do with this! Would we acquire any more companies? We have had a couple proposed to us before and since the acquisition of Quay Catering. If the time is right and what they have is going to be an advantage to us then I don’t see why not.
Earlier this year you said that you’re keen to nurture ties with food service consultants in order to further your business. How is that going?
It is work in progress. We have got some good relationships developing with a number of consultants and we have been advised that we are actually on their sort of ‘recognised affiliated contractors’ list, so it is starting to pay dividends. We have yet to win a consultant-led project as such, but the enquiries are coming, so that is a start.
It’s not something you expect to happen overnight then?
No, it takes a lot of work, a lot of time and a lot of effort. We haven’t approached that prior to the last 24 months because you will usually get one opportunity and if you fail on that opportunity you will not get another chance. I also think we had to be at a level of ability and performance and have the right experience to even be entertained. It has coincided with Upnorth joining CEDA — at that point I think we felt we had grown up, matured and had enough experience and resources to walk into both of those arenas with our heads held high and be recognised for the work that we have done and can do.
Which brands do you work most closely with?
We work very closely with Rational, Foster, Hobart, Dawson — Lainox and Mareno — Manitowoc, E&R Moffat and Halton. It depends on the project and what the requirements are. Depending on the budget we will use brands that we buy in occasionally on a wholesale basis, so we will deal with Interlevin, Valera and AFE for brands that we don’t use every day.
What do you look for in a manufacturing partner?
It is about establishing a partnership. The manufacturer has to understand what you are trying to achieve and from our perspective they have to have a strong and reliable product at a sensible price for what it is. It has to represent value for money and it has to have a very strong technical back-up. The availability of spares and the actual original product is paramount. Personally, because we have got our own engineers, we tend to regionally provide the customer with a level of service that they cannot acquire from a manufacturer — same day response. Some of the manufacturers don’t allow or don’t permit a dealer of equipment to be recognised as a service partner. We have managed to break some of the moulds on that — for example Rational — because we can provide an instant response to the client regionally.
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How much attention do you pay to the margin and discount structure offered by a manufacturer or supplier?
They are important, but it is pointless just saying ‘we are going to give you 60% discount’ if the list price is sky-high to start with in comparison to its equal alternative. There are manufacturers that we deal with that we only get 30% discount from compared to 60% with others because the initial price of the product is not that high compared to its competitor. Everything is relevant to value for money and its worth.
As a distributor and a specifier of equipment, it’s also important that your margin or the discount that you acquire is regionally unique. You cannot sensibly and commercially provide every brand under the sun, you have to nail yourself to one particular post somewhere along the line, and if you are nailing yourself to that post then you expect that you are looked after and protected on a discount basis against another rival that may well be five miles down the road from you. You are either a Falcon or a Manitowoc dealer; a Foster or a Williams. We supply Foster and Williams, but we specify Foster because we are at an advantage with that discount-wise.
Do you review the brands you work with every year or is the line-up unlikely to change so long as your needs as a dealer are being served?
I don’t think you try and fix something if it is not broken. If somebody comes to you with a product range and you are dealing with one of their major competitors already, why would you possibly change things? Perhaps you would if they gave you a better discount than you had before and you were going to be able to make more money. But there is a lot to assess and the whole package has to be right. We rarely jump ship from one brand to another. The manufacturer or brand would have had to do something wrong before we would probably start looking, although it has occurred recently.
Really? What was the situation with that particular case?
I am not going to say which brand, but we actually almost fell out of bed with one manufacturer that we were very loyal to. They changed the structure of how they were dealing with us and the conditions that they were imposing as being part of that dealer agreement meant we financially couldn’t afford to do it. We were told it was unique to us, but we have since found out that was not the case. We are still working with them but it is on a diluted basis. The turnover that we do with them is probably one fifth of what it used to be. Somebody else is getting [that turnover] now though!
Name: Upnorth Foodservice Equipment
Address: Unit 13, Blaydon Trade Park 2, Tollbridge Road, Blaydon, Tyne & Wear, NE21 5TR
Tel: 0191 414 2882
Specialist areas: Design, supply, installation, testing and commissioning of commercial catering equipment, refrigeration, bar systems, servery counters and extraction systems.
Parent company: Upnorth Group.
Fast fact: Upnorth Foodservice Equipment is one of five divisions that comprise the privately-held Upnorth Group. The other divisions specialise in facilities maintenance, renewable energy solutions and temperature control systems.