Azhar Siddique has recently been on the nation’s TV screens trying to impress Alan Sugar and his boardroom judges on the latest series of TV’s The Apprentice. But when he’s not doing that he can be found running Manchester distributor UK Equipment Direct. Catering Insight caught up with him to discuss how a shift in business model has transformed the face of the company.
UK Equipment Direct was launched five years ago as an e-commerce venture. What made you decide to start it up?
We saw an opportunity in the market, took the bull by its horns, and essentially tried to make sure we could maximise the services that we offered to customers and at the same time remain profitable. That was the key focus for us. We have also been through a number of changes and transitions. Our main business focus since we started in 2007 has changed dramatically to where we are now, so it has been a bit of a learning curve for the business.
What sort of changes have occurred? Does the company still make the overwhelming majority of its sales online?
No, we have gone from originally being a 90% e-commerce and 10% project-and-trade operation to now doing 80% project-and-trade and 20% e-commerce. The transition in the business has been dramatic. To put a number on it, we do almost 270 shop refits a year, which gives you an indication of the work we get involved in now. At the same time, we have also become a major importer. We have got exclusive agreements with six manufacturers and we have got two trademarked brands under our own copyright. What that allows us to do is control the margins that operate within the UK, rather than using UK manufacturers and being stuck on the e-commerce side of the world where margins tend to be single figures and sustainability becomes quite difficult.
What made you decide to shift the strategy so dramatically, especially as more business is being done online these days?
The market where it was when we first started — just having a call centre solution and using the internet as a marketing tool — kind of went out the window in 2010. We realised that somebody else could replicate our solution sat in a bedroom, beat our prices by a couple of percent and we’d lose the business. So then we realised that we needed to have a different angle and focus, and we obviously went down the project route.
It sounds like a monumental shift in business model given your original intentions…
Absolutely. And I think two words that you need to look at during that process are sustainability and change. Those are the most crucial points that businesses unfortunately have failed to recognise through the recession period. You need to have a business which is sustainable and you need to have a business which can adapt to change. The growth in the UK catering equipment market will be considerable in the next 10 years, but I think we need to make sure that businesses in the UK are taking advantage of that and start to support UK manufacturing. That is another angle we have been trying to look at, but it is difficult to find a manufacturer in the UK who can match both the price and the quality of equipment coming outside the EU, which is unfortunate because it pushes UK distributors to import rather than export.
A lot of dealers are critical of the impact that online sellers are having on margins. What is your view on that?
I think the manufacturers in the UK are to blame for this current situation. If they were to put guidelines in place restricting what people could sell online — in terms of margin-capping — then there would be a level playing field and it would be down to the customer to decide. But at the moment, from a customer perspective, it is a win-win situation because people are just reducing prices to win business rather than giving a proper valued service. I blame a lot of the mistakes on manufacturers not being able to control the distributors and the way in which the distributors market their product, which unfortunately devalues the product.
How many staff does UK Equipment Direct employ?
At the moment we employ 14 people. We are looking to grow that number and we have currently got some advertisements out for project managers and business development managers, which are mainly inbound. All of our work is done through inbound work, we don’t outbound contact customers or anything like that at all. We get a large number of enquiries through distribution while another part of the business which is growing is the export market.
What are you doing on the export side of things?
Believe it or not we manufacture products in Europe and bring them into the UK under our Ital Bravo brand and then we supply those products into Lithuania, Singapore and some of the European countries closer to home. We will manufacture a product in Italy and supply to an Italian customer. So it gives you an indication of the reach and what we are aiming for because export is a crucial part of the growth long-term and I think that is a focus which a lot of the distributors need to have as well.
Can you give us a flavour of the sort of clients you have been working with on the project side?
We have won contracts with Kensington Palace, which was really highly sought after and we got a lot of media interest from it, Chessington Zoo, and we recently won a contract for 17 NHS sites. Being an ISO 14001 and 9001 accredited business does add a lot of emphasis to the quality and environmental aspect of the business that we try and cover. We are one of the only distributors in the UK which offers a 24-hour telephone support service. You can call our line any time you want and after 6pm all our calls go to our Bristol centre where they are handled. We have high-profile clients on eight- and 12-hour SLAs and in order to meet those requirements we have to be able to sustain a service.
Click on page 2 below to continue reading [[page-break]]
What are the biggest selling equipment lines for you?
It varies depending on the marketing campaigns we run. Essentially we will work with a manufacturer on the launch of a particular product during a particular season and then we will advertise a product range. A lot of the products we supply are very seasonal — so refrigeration within the summer period, for example. Obviously we always try and push and promote our own brand within the UK and that is doing quite well through the distribution network. Our distributors can reap the rewards and benefits of having double-figure margins, which has really been our emphasis on that side.
How much focus are you putting on developing that dealer network?
We launched a 200-page catalogue at Hotelympia and Northern Restaurant & Bar, which contains a full range of products that are only available to distributors. What we are doing is creating a separate pool of products solely for distributors so that they can operate at the margins they want to and we then control what people operate at. In essence, we are [acting as] a manufacturer, so we know exactly how our distributors feel and our manufacturers should know exactly how we feel. We can therefore see both sides of the coin from a pricing and a distribution perspective. That is why we have quite a strong opinion on how we feel things should be done.
It has previously been reported that the business is targeting sales of £9m this year. Are you on track to achieve that?
I think we will probably fall slightly short of that. At the time when we were running the e-commerce tool the figures would have been realistic, but the change in direction of the business has had a slight flat effect on that growth. Although we are not far off hitting, it was a growth pattern we discussed based on the e-commerce side. But obviously it was either move away from e-commerce or not be trading today and that was the decision we had to make. We took the decision to focus on projects and going down that particular route has worked in our favour.
Life on The Apprentice
The catering equipment and refrigeration sector has received some unlikely exposure on primetime television over the last few months courtesy of UK Equipment Direct boss Azhar Siddique’s involvement in the current series of The Apprentice.
Siddique’s part in the show recently came to an end but viewers saw him battle it out with 16 other hopefuls in a bid to go into business with multi-millionaire tycoon Lord Sugar.
At the time of speaking to Catering Insight, Siddique was still involved in the series which meant contractual reasons prevented him from discussing the BBC show.
However, a spokesperson for UK Equipment Direct said that his appearances on the programme had given the business a boost.
“It has been a really exciting process for Azhar and he would say to anyone who wants to become an entrepreneur or go into business to apply for the process. It has proved to be great publicity for the company and we are getting noticed in the market for that reason, which is a good sign. To be honest with you, although he is appearing on a BBC show, Azhar is not actually one for the limelight.”
The spokesperson added: “As you can probably imagine, Azhar is contracted to the BBC and is not allowed to disclose or say anything to anybody because the media has been approaching family and friends. He also gets recognised frequently when he goes out or even when customers come to our showroom and offices — people recognise him as that guy off The Apprentice.”
Name: UK Equipment Direct
Address: Unit A2, Longford Trading Estate, Thomas Street, Manchester, M32 0JT
Tel: 08000 038 0121
Specialist areas: Beverage machines; cooking equipment; food prep equipment; refrigeration