Business profile: Pho restaurant

17 December 2014 by
Business profile: Pho restaurant

I don't think anything can prepare you for the full-on assault of how much opening a restaurant will completely consume yourwhole life," says Stephen Wall as he looks back on the first restaurant he and his wife Jules opened together a decade ago, back in 2005.

"Everything went out of the window - social life, the whole shaboodle - for at least 18 months to two years, probably until our son Thomas came along."

"It is all day, every day," Jules chips in. "You can't stop thinking about it. You are there until midnight or 1am, and then you are there again in the morning and all weekend trying to do the accounts. When we first opened we did everything. We had a Vietnamese head chef but I was also in the kitchen, so at the end of the night I was mopping floors and cashing up. We did literally every job at some point."

Good preparation then, considering that since the original restaurant opened in St John Street in London's Clerkenwell, they have launched another 12 - the most recent of which opened in Balham, south London at the end of this year. Sites in Covent Garden in London, Birmingham Grand Central and Manchester's Corn Exchange (not yet fully confirmed) are set to bring the total to 16 when they launch later next year, with another two sites a possibility.

It wasn't necessarily what they expected to happen when the two then-30-somethings, both with a background in marketing, first started Pho. "I don't think we expected to have more than one," Jules laughs. "I had never dreamed of being in this situation."

But they were convinced of the concept almost from the very start. Around 11 years ago, after Stephen was made redundant from a job in sports marketing, they decided to travel around Asia, first to Laos and then to Vietnam. Their visa for Vietnam lasted just 31 days, but the country and its food left a lasting impression on them both.

"We just loved the food - the noodle soup, or pho, in particular - as well as the hustle and bustle of Hanoi and Hoi An," says Stephen.

"We had lived in Hackney for about 15 years, so we knew of the tradition of Vietnamese restaurants. We were big Wagamama customers but when it started it was very ramenfocused. We wondered why no-one had done Vietnamese cuisine because we thought this dish was better, fresher and tastier."

It also appealed to Jules, who did a degree in food marketing and food science. "I am obsessed with cooking and experimenting," she says. "I just love the fact that with Vietnamese food you added the herbs and created your own dish, so it could be different for every single person that ate it. The more we looked at the idea, the more viable it became."

The third chapter

Stephen likens the stages in which Pho has grown to chapters in a book. They are, he reckons, now into chapter three. The first was the opening of their first site almost 10 years ago, with chapter two being the arrival of Tom and Ed Martin, the owners of ETM Group, who went from being enthusiastic customers of the first site to investors who helped them obtain the funds and contacts to reach five or six sites.

Chapter three started when the company secured a £5.2m investment for expansion in July 2012 from ISIS Equity Partners. At the start of 2014, the stated aim was to get Pho to 25 sites within four years, and former Wagamama boss Steve Hill was brought in as chairman to help steer the business towards its goal.

"We love Steve - he is just the perfect personality for us and the business," says Stephen. "We have not really changed our focus since he has come in, but what we have
got is someone who is incredibly relevant; who has been there and done it.

"When we were still on our first site, he was chief executive of Wagamama, with about 35 sites, so he is there as this fantastic sounding board. He is also very black and white, which is wonderful - a proper Northerner's attitude, even though he is a Bristolian," says Mancunian Stephen (Jules hails from Durham).

Site selection

As the business expands rapidly, the ability to select sites that are likely to perform well becomes ever more important. They have already experimented with Balham and
Chiswick to test if the brand can work in slightly more suburban locations, as well as the more urban, central London locations it has succeeded in so far.

So what makes a good site? There's a pause before Jules deadpans: "Customers", and the pair break out into laughter. More seriously, she adds: "In an ideal situation, you have got to have a good evening trade, good lunch, an the potential for takeaway. It used to be that we had more female customers than male, but I don't think that is the case now."

"It always used to be 21 to 39-year-old ABC young professionals who were well travelled," adds Stephen. "But we have got a different site model to a lot of people, which is a real plus when it comes to our adaptability and maybe one of the reasons we have been able to grow in the past few years. We have sites that go all the way from 35 covers through to Trinity and Westfield, and Chiswick and Battersea in the suburbs [where customers are likely to be a bit older], and larger sites like One New Change and Brighton, which is 130-150 covers. So it comes back to what we joked about. If we see a site and we think enough customers are going to go to it across the week, we look at it."

Smooth operators

One place where the format appears to work particularly well is in Leeds Trinity Kitchen, the food-led offshoot of Land Securities' Trinity shopping centre development in the heart of the city. Pho is rumoured to be one of the regular top performers in Trinity Kitchen - and that is among some pretty stiff competition that includes Chicago Rib Shack, Tortilla, PizzaLuxe and Chip+Fish. So what is the secret to outperforming your rivals?

"We don't open anything by accident," says Stephen. "A lot of research goes into a site once we have identified it and we leave no stone unturned. It's a well-designed, appealing site, the location is good and the food is good."

"I think it is also because we are different and it is good value for money," adds Jules. "Every customer wants value for money, but especially if you go somewhere like Manchester, Leeds or Newcastle, people want something they really enjoy in a cool environment but without feeling they have been ripped off."

Then there are the little things that they have learned after opening so many restaurants that help ensure that things go smoothly. "We always get a little bit of anxiety when we are opening a new place, which I think is natural," says Stephen. "I think the day we open a site and are totally chilled and blasé about it is a bad day. We put our A-team into a new opening, we base ourselves there, and attention to detail is paramount.

"You can guarantee that if a piece of equipment is going to go down, it will go down on your first day or two, so you have got to be prepared for that. For example, we get loads of spare bulbs in for the first day and we make sure everyone knows where they are."

"I wouldn't ever want to get to the point where we opened a site that we hadn't even been to," says Jules. "Our obsessiveness has helped us on our way. To us, it is still our business and it is personal, so every time we open a site we will be all over it."

Getting the staff

Each restaurant makes its own food, which may sound like an obvious point to make, but even items like spring rolls, which are so often procured from the local cash and carry, are made in-house at Pho. That presents challenges when it comes to staff recruitment though, because it often requires oriental chefs with the skill to produce authentic dishes. And it is not just back of house staff that are hard to secure.

"Good sites and good staff are a nightmare to find," says Stephen. "We want good people with personality who hopefully mark us out from other restaurants, and good people in the kitchen who are well-trained and who care. When we do get them we have to retain them, but there is massive competition.

"The bigger brands are rolling out at a rate of knots and that means there is a very small pool of people out there, which is crazy really when you think about it. People have even taken to advertising in The Metro, which is reflective of how hard everyone is finding it."

The future

The end of the current chapter (that's chapter three) comes when Pho hits 25 sites. After that, it depends on what ISIS wants to do, says Stephen. But in the meantime, the pair plan to remain obsessive about the restaurants and the customer experience. Perhaps unsurprisingly for two people trained in marketing, the health of "the brand" is something they are concerned with, and the aim is to keep it fresh.

"We still want to be proud of all the sites when we have got to 20-odd," says Jules. "We are not doing sites for the sake of sites. They have got to have personality and we still want them to be a desirable place to go to."

Nonetheless, they won't rule out an eventual sale of the business, although it is not on the cards now. "I don't think I want to be here with a walking stick in my hand aged 65," says Stephen, "but it is something we are immensely proud of. We have built something that is a reflection of our personality. From day one we have never had an ultimate goal - we just want to be proud of what we have done and we will see where that gets us."

It's a modest outlook, but nonetheless one that seems to work. Ten years on, it looks like all those sacrifices of the early days have turned out to be well worth it.

The food

Their London base and 10-year history means it has not been too much of a challenge to obtain the authentic ingredients that Jules and Stephen want for their dishes,
and the number of sites means they can now negotiate better prices. But there are times of the year where certain things, such as Thai basil, are not available.

"It is difficult sometimes," says Jules. "You want to deliver something that is value for money, but you have got ingredients that are coming from the other side of the
world. It is tricky to find that balance." Sometimes it simply means that certain dishes won't appear if the ingredients for them can't be obtained at the right price.

While the pair tries to ensure authenticity, occasionally they tailor dishes to UK tastes. One of those areas is how much fat is in a dish. In Asia, Stephen says, pho often contains meat with a much higher fat content, which isn't well received over here. "It's something that Western palates don't particularly love, so pieces of brisket or chicken in our noodle soups won't have so much fat in it."

Typical dishes

Goi (Vietnamese salads)

  • Gỏi bẩp chuá»'i Fragrant banana blossom salad with tender beef, peanuts and star fruit (£7.75)
  • Gỏi ngÁ³ sen Tangy lotus stems with chicken, prawns, green bean and sesame seeds (£5.95)

Pho (noodle soup with side plate of fresh herbs)

  • Phỏ chÁ­n Tender brisket (a bit like roast beef) slow-cooked in stock (£7.95)
  • Phỏ Ä'ặc biệt (house special) Tiger prawns, tofu and flash-fried steak with garlic in beef stock (£10.50)

Bun Noodles (vermicelli noodles with a lemongrass and chilli wok-fried topping) Chicken (£7.75)

Pork spring rolls (£8.25)

Com Tam (prawn and chicken curries served with rice)

CÆ¡m tầm rang Aromatic, spicy wok-fried broken rice with chicken and dried shrimp (£7.95)

Financial performance

Turnover: £8.2m*

Pre-tax profit: £0.5m*

Staff: 350

*52 weeks to 24 February 2013

The latest available accounts at Companies House for Pho show figures for the year up to 24 February 2013, and at the time of writing, no more up-to-date figures were in the public domain. However, Stephen says turnover for the year to the end of February 2014 will be around £10m with pre-tax profit at around £1m. By the end of this current financial year, company EBITDA is expected to be up by at least 50%, with turnover up by "not far off" 50%.

"This year [the year to February 2014] was a good year and we took a step up, but you will always have a year of running to stand still when you get ready for the big push and that was our year when we put staff in and put the pipeline together," says Stephen. "So we took a step up, but it wasn't a huge step up. Whereas next year, everything is in place and the company will have grown around 50% whatever way you look at it."

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