Jamie Oliver lost £25m trying to rescue restaurant chain but what has he learned from failure?
Jamie Oliver lost £25m trying to rescue restaurant chain but what has he learned from failure?
A lot of authors and motivational focus on successful people like Richard Branson, Steve Jobs and Warren Buffett. They talk about copying the habits of successful people, learning from successful people and that’s all fine.
But you can also learn from failure. You can learn from bad habits as well as good habits and you can learn from other people’s mistakes rather than making your own.
A good example is the recent collapse of UK Jamie Oliver’s restaurant empire. The business not only went under, Jamie sunk £25 million of his own cash trying to save it.
I assume that he had no personal liability for the business debts, so he could have just walked away and let it go instead of throwing good money after bad.
However, I’m not sure if Jamie has learned from his own mistakes and doesn’t seem to accept that he even made any apart from being misled by his management.
In a recent interview for the Times, the TV chef blames high rents, or the landlords, business rates and competition from delivery services like Uber Eats and Deliveroo for the downfall of his business, which saw the closure of 22 restaurants and the loss of 1000 jobs.
Whilst the above list might be factors in the story the decline of the business, they are just external factors.
He does not seem to accept that he and poor management had a hand in the mess, although he admits that the “wool was pulled over his eyes” and he had “poor advice”. I’m not sure if that is more in relation to him pouring in £25 million of his own cash to save a sinking ship rather than the mismanagement of the business prior to it going into administration.
A good leader takes the blame as well as the credit for the success or failure of business.
Either way, he’s blaming someone else. To be fair, he might not be able to bare his soul in public, as we are not very forgiving towards failure in this country. Privately he might just be saying, “sorry I screwed up” or words to that effect!
If he felt that rents were high in the prime spots he took on, why did they sign those leases for over 22 restaurants in the space of a few years?
When you sign a lease, you must look at all the clauses and rent review periods and look forward to project future rent rises.
Landlords have businesses to run too. Whilst people may not have any sympathy for what they often called “greedy” landlords, it should be remembered that many of these prime city centre buildings and shopping malls are owned by your pension funds. If they go down, so does your pension.
If rents are too high, the buildings would not be let or the landlord would not be able to find tenants.
There is some evidence that we could be reaching saturation points for shopping developments and maybe rents are too high. Primark are now asking for 30% reduction in rent because of deals done with administrators for companies which have renegotiated rents.
Regardless of that, Jamie took on these leases in prime areas at top rents whilst riding the crest of a wave.
There would have been a lot of competition for these spots and I’m sure the landlords felt that Jamie Oliver was almost a prime blue-chip tenant and good for the rent. Landlords will be left sitting on empty premises with long rent voids. Nobody ever mentions that the landlords might have mortgages to pay when these high-flying businesses come crashing down to earth with a bang.
I was also a commercial landlord and know what it’s like when a tenant pulls the plug.
As for business rates, they are a known fixed cost which would have been factored into the business plan from the start. Not all councils have raised their business rates in recent years. He’s just jumping on the retailer bandwagon of complaining about business rates in relation to online services like Amazon which obviously do not pay business rates for premises.
The truth is, the problem had less to do with increasing costs than decreasing revenue.
You can’t control external factors like taxes, but you can control internal factors and the way you run your business.
Jamie cites home delivery services as a reason for a fall in profits. He does not say why he did not join the booming home delivery market by using companies like Uber Eats, Just Eat and Deliveroo to deliver his food to his customers?
You know the old saying, if you can’t beat them join them.
It’s interesting to note that none of the above companies own or run a restaurant or takeaway establishment. They make money on delivering food and actually help smaller restaurants gain wider access to the online market in much the same way that Amazon does for small retailers.
Just Eat is now valued at £112 million after takeaway.com increased its stake in the firm founded in 2000 by Danish investors. The combined group will be worth over £8 billion
Uber recently launched on the US stock market valuing the company at $82 billion.
Uber Eats is in talks to buy Deliveroo which raised £400 million in venture capital when it launched in 2013 and is now valued at £1.5 billion. Amazon were also interested in acquiring Deliveroo but the deal was blocked by the competition commission.
I like Jamie Oliver and admire many of the things he has done to help young people, even if some critics say he is motivated by self-publicity! I also love his great food and simple TV recipes, and I’m actually able to follow them! I even have one of his books.
I certainly don’t gloat over any business failing and feel sorry for the people lose their jobs.
Having said that, I think Jamie should admit some simple truths.
Firstly, he took his eye off the ball big time. Even if he was not running the business hands on himself, he should’ve been keeping an eye on the figures long before the business went into a downward spiral.
Unprofitable branches should’ve been closed, costs reduced and management shaken up.
Secondly, the management could have adapted the business to a changing market, such as home delivery or lower spending during the Brexit period.
The sad fact is, that the restaurants were not quite as good as the hype. Sorry Jamie, unfortunately the food was overpriced and as a customer I felt that I was not really getting good value. Everything was extra for this and extra for that to complete an already expensive main course. I don’t mind paying for a really good meal, but the food was not quite up to the prices and was not fine dining.
I tried several of his restaurants and did not see much change in the menu or special offers that would attract new customers.
I was never asked to register to a mailing list or app for special offers and discount vouchers, as practiced by other chains like Prezzo or Bella Pasta. Today I received another email from Bella pasta offering a £10 special to encourage me back through their doors.
Sadly, there was nothing there that made me want to rush back to any of Jamie’s outlets, although a discount voucher would have helped.
Thirdly, you have to question whether or not he expanded too quickly or open more branches then the management were able to cope with. The company must’ve taken on huge borrowings to open up so many restaurants in a short space of time.
I would imagine they paid premiums for some of the leases on the sites. I don’t think they would have got much change out of £1 million for the set up and fit out for the premises of the restaurant branches.
Jamie was riding on the back of his celebrity name and frame. The public loved him and he could do no wrong. Maybe he believed too much in his own publicity and thought he could do no wrong?
I personally wondered why he did not open up a select few restaurants, like Gordon Ramsey, in a few prime spots or use his name to offer franchises or joint-ventures where he was not taking on all the risk. Yes, it’s easy to say that with hindsight.
I do hope Jamie learns from his mistakes and I’m sure he will be back. I believe he also has overseas branches which are not affected by the UK collapse.
The main thing that is that when you make a mistake or things go wrong in your business, you can’t just blame external factors and you have to ask yourself questions like,
What could I have done better? Where did I go wrong?
How did I f*** it all up!
There is an old acronym, which has almost become a cliché, when setting up a business plan: S.W.O.T, which stands for:
You Fill in the blanks.
In summary, failing can be a useful learning experience as well as a stepping stone towards success, as in the classic Thomas Edison experience of 10,000 attempts to invent the right lightbulb.
Most successful business people have suffered Major setbacks at some stage in their business career.
Steve Jobs was fired from the company he founded, but was later brought back to rescue it and make Apple one of the most valuable companies on the planet.
Businesses also have to adapt to changes and threats. In the 1970s, the oil crisis caused petrol prices to skyrocket. American gas-guzzling carmakers were caught short and were almost put out of business by Japanese car makers who made smaller and more fuel-efficient cars.
They regrouped and adapted and come out with their own fuel-efficient cars.
Now they face new external threats from regulators and electric car makers like Elon Musk’s Tesla, whose firm was recently valued on the stock market at more than 100-year-old multinational companies like General Motors and Ford, despite never making a profit!
Do you think they are going to just sit back and let Tesla steal their market? Of course not! They are already developing their own electric vehicles, which will no doubt be cheaper and more accessible than the luxury Tesla. They may even buy out companies like Tesla that threaten to take too many bites out of their lunch.
Do you think these companies are going to say, “oh well, the regulators have brought in these new emissions laws and higher taxes so there’s not much we can do about it”?
You can learn from both your past successes and failures by analysing what went right and what went wrong.
The author and speaker David Goggins says he always falls back on a military debrief format used to analyse every operation from his days when he served as a Navy Seal. If he has failed at something, like a world record attempt, he looks at everything that went wrong from preparation and training, to omitting to anticipate possible threats, obstacles or weaknesses in his plan. He then goes back and tries again without making the same mistakes.
It took David two or three attempts before succeeding at many of the things he tried to achieve, such as becoming a Navy Seal or breaking the world 24-hour pull-up record. He talks of that moment of pushing past pain and finding success just the other side or one step beyond his biggest failures.
I talk more about practical steps to managing your money, getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3 R’s of Money Management, the Money B.E.L.I.E.F System, the Stars Who Lost it All and much more. Check it out on Amazon http://bit.ly/2MoneyBook.