When Catering Insight last caught up with south London-based distributor Millers Catering Equipment in 2017, incoming MD, Dean Broadbent, detailed his aim to grow the business both organically and through acquisition.
And just two and a half years later (though this interview took place before the coronavirus hit), he has already achieved a great deal towards that objective. “As a new owner in a new sector, I knew what I wanted to get to, and I’ve probably got there far sooner than first thought,” he detailed, crediting his staff as being key to this paciness. “Everybody who works here is very aligned to the objective – they have adopted and adapted to the change, and performed magnificently.”
In numerical terms, in the almost 4 years since Broadbent purchased Millers Catering Equipment, turnover has steadily increased from £474,000 to £1.8m. And its topline organic growth just last year was a major 42%.
But now this is only one strand of a group generating £4.5m annual revenue. The acquisition trail started in 2017, when Imaco Catering Supplies was added into the Millers Group. The London-based firm specialises in branded products such as coasters, matchboxes and toothpicks – all supplies which can be used to deck out a site’s front of house in a customised way. The firm counts high end London venues such as Japanese restaurant Roka and members’ club Annabel’s amongst its clientele.
Next up, the Millers Group then bought the assets of Camberley-based servicing company, Allround Catering Engineers, in October 2018. That brought that company’s MD, Jay Naylor, onto Millers’ board as service director.
And the most recent purchase that made waves in the UK catering equipment supply chain was of Surrey’s Equipt to Cook, finalised last December. Broadbent detailed that he entered into discussion with his counterpart, Yvonne Martin, around February 2019. “We see this as a merger, so the plan was always to do that properly,” said Broadbent. “Millers Catering Equipment, Equipt to Cook and Imaco Catering Supplies all have their own brand identity. That helps keep us focused on each of the three business units. We can track them against the prior year so we can know what we’re doing right and work out where we’re going wrong.”
He praised Martin, as well as Equipt to Cook’s sales director Sarah Powell, and sales administrator, Deborah Segovia, saying: “Their knowledge and contacts are invaluable, and that was part of what the appeal of the company was for us. Equipt to Cook has got a good name in the industry – we have absolutely no ambition of tinkering with that.
“We would like to think there are some synergies in the back office but they are not huge because Equipt to Cook was a well-run, lean business in the first place. We also think that the opportunity to utilise our service resource in Equipt to Cook’s customer base has got value. We think there’s probably around £50,000 of opportunity there.”
This would mean that Millers Catering Equipment would be providing engineer resources for its sister company. “Equipt to Cook would have previously outsourced the installation to a third party,” reported Broadbent. “That process remains the same, except now we would do the installation, so the money stays within the group.
“The other advantage is if we need to be a little keener on our pricing, because we need to show an overall cost objective to the customer, then we can do that because we have got our own in-house installation team.”
Millers Catering Equipment itself has generated organic growth through “looking after our customers, looking for more customers, doing some service work and improving our service offering, as well as being generally more busy in the marketplace,” according to Broadbent.
“It’s always been about finding customers for me. You’ve got to get out and make it happen, you can’t wait for them to come to you.” Currently around 50% of the dealer’s revenue comes from servicing. “That’s a consequence of it being a huge market and if you start looking for business in that market you will get it – I think there’s more that we can do there.”
The company has re-invested a lot of that money into its own infrastructure. Broadbent detailed that around £45,000 was ploughed into refurbishing the office last August, as well as upgrading the IT infrastructure and systems. “We spent money on the business so that when we hire more people, it’s a more modern place to be.”
The hardware included a dedicated fibre optic line for high speed internet connection, as well as installing Clik field service management software.
In terms of supply chain relationships for the two sister dealerships, they both do good business with a limited number of suppliers. For instance, they collectively supplied over 100 Rational appliances last year, half from each entity. Broadbent analysed: “I think opportunities for better supplier discounts across the piece are fairly limited, but if either company receives a higher discount on certain product lines, then we can purchase them through that channel and subsequently funnel the supply through the other. What I do hope for is that when a delivery’s delayed or we need an urgent spare part, our relationship with the supplier counts.
“However, my intention would be to start talking to the suppliers about Millers Group as a whole, not just Equipt to Cook or Millers Catering Equipment individually, and at some point you would expect to see some sort of harmonisation in those supplier discounts.
“There should be just one point of contact for the manufacturers, so that will hopefully make things easier for everybody. But I also think that the manufacturers have to play their part and show a bit of loyalty – if they don’t, then we just won’t buy from them.”
On strategy, Broadbent emphasised: “Our plan for this year is to do a better job of running the business as a group that has three entities. We would look to strengthen the back office platform so that we can make it consistent across all three organisations – that will mean we can make some savings. We should be more efficient, so we shouldn’t need to hire people as we’ll have a better way of dealing with elements such as accounting and invoicing, for example.”
The group still has ambitions of increasing overall headcount though. With 14 staff across all divisions, the aim is to increase that to about 20 by the end of this year, through additional sales and service resource. “Otherwise it’s more a case of redeploying the resource we have already into the right type of roles. We’re almost there now, but we just need a little bit more fine tuning to make that happen,” said Broadbent. “When we’ve established that back office engine with three front-facing sales functions, then we can maximise the organic growth. The objective is now to push past the £5m mark in 2020 – that’s another 10% uplift from what we achieved collectively through 2019.
“We are not maximising our sales opportunities right now, because we are at the tipping point where we almost haven’t got enough hours in the day to manage what we’re doing. It’s very important to maintain the integrity of our client base to make sure that we deliver on time and accurately. But with the inclusion of some extra sales resource, you would think that to find an extra £500,000 in this market is not difficult.”
The individual margins of the three entities are contrasting, with Broadbent reporting that Imaco’s is high, Millers Catering Equipment’s is good and Equipt to Cook’s is narrower. “We probably couldn’t do much to improve Equipt to Cook’s margins, as it focuses on selling equipment and you can’t sell that for more than the market will allow. Therefore it’s about looking at different ways to get the customer to spend more money with you.”
The group is also intending to leverage the relationships it has across all three businesses to be able to deliver a more streamlined solution to customers. According to Broadbent: “They’ll have one port of call. Once we’ve understood how to best deliver this, a customer can buy equipment, get it serviced and buy branded catering supplies for front of house from our group. From our side we’d like to maximise the spend that those customers can possibly muster with Millers Group.”
He believes that all three entities complement each other, as there are almost no overlapping sectors. Imaco is generally restaurant-dominated, while Millers Catering Equipment focuses on facilities management as well as small independent restaurants, and Equipt to Cook has a footprint in both the hotel and staff dining segments. “It’s an exciting opportunity now, because we’ve got all three businesses that are interacting with different parts of the industry, and if we can tap into those and bring it all together, there’s a big revenue growth potential.
“Because our group can do everything: design, sell equipment, service, deliver and install it, as well as providing front of house supplies, we can assess and understand what are the most profitable parts of what we do and then leverage those to make the profits higher.
“If you’ve got a multi-tiered approach, it doesn’t matter whether the market is up or down. I’m equally happy if a customer wants to string out the life of their assets or if they want to buy a new one. It just means that I can bring some revenue and profit forward.”
Going forward, to measure the progress of the integration, Broadbent will look at the situation holistically, rather than rigidly sticking to metrics such as overheads revenue percentage or net profit percentage. “You can get bogged down in looking at management information that that detracts from the objective, which is to look after your customers and sell more.”
He detailed: “We are aiming for good, robust solid business in a big market, where we’ve got customers who we know are going to pay us, and where we haven’t got to be too involved administratively with anything. We have managed to improve the shape of the business financially through altering the type of customers we engage with, so for instance the facilities management companies we work closely with pay us inside 40 days.”
However, he also indicated that more business developments are on the horizon: “We’ve got a good capability to grow organically on the installation, equipment and design sides because of the resource we’ve got now. We don’t even spend anything on marketing at the moment – at some point we should, but only when we’ve got the infrastructure to support the lead return that that generates.
“When we start to look beyond 2020, the strategy will be more about acquisition, particularly on the servicing side – I think there’s a clear opportunity in this market. I would also suggest we are probably a target for someone at some point, because we are a size and profitability that would probably make us appealing too. Our ambition in the next 3 years is to become a £7.5m business.”
When questioned about the current health of the distributor market, Millers Group MD Dean Broadbent commented: “We are all under margin pressure, but I think you’ve just got to accept that. If distributors enter a downward spiral with margins, is a self-inflicted position that they adopt because they refuse to do anything differently.
“Millers has been fairly disruptive with what we’ve done in the last 3 years – we’ve been fairly challenging to ourselves and our employees, and the way in which we go about doing things.”
He further analysed: “We are always fighting internet suppliers, it’s just a given. If you went to most other industries they would have the same challenge. You have got to be better at being in business, accepting today’s reality and working around it to add extra value elsewhere. Look at opportunities where you can’t be price checked and deliver intangible solutions that will give a customer the overall answer to a problem, not just a part of it.”
Looking back up the supply chain, Broadbent concluded: “I think the market is very disjointed, in the sense that there is very little distributor and manufacturer loyalty to one another. I think it’s difficult to achieve that, but it can be done.
“Manufacturers ultimately want to shift a box, but as a distributor, I think we are looking for a little bit more from our supply chain. And you will only get that if you are honest and brave enough to actually only use a certain supplier.”