Wednesday 18 October 2017

Fit-out king is loving it after turning disaster into global gold

It wasn't always plain sailing for the young man who led a management buyout of a kitchen supplier firm but success came thanks to grit and adaptability, says Sean Gallagher

'I thought at the time that if I could just turn the business around, it would be like winning the lottery'

Napoleon Hill, one of the great writers on success, wisely remarked that "no person ever achieved worthwhile success who did not, at one time or other, find themselves with at least one foot hanging well over the brink of failure".

Such is certainly true of David Bobbett of H&K International. He and I were among a group of both current and previous finalists who travelled to Silicon Valley earlier this year as part of the Ernst & Young Entrepreneur of the Year Awards.

It was during the week-long trip that I heard David's story for the first time -- and I wondered how somebody so successful had escaped my radar for so long.

Going to visit him recently, I quickly discovered that his story is one with the capacity to inspire anybody who has ever failed an exam, been unemployed or faced major challenges in business.

With headquarters in Dublin, H&K manufacture stainless steel kitchen equipment for large restaurant chains such as McDonald's, Burger King and Kentucky Fried Chicken.

"Our ability to design and deliver complete fit-outs to restaurants anywhere in the world, and have them up and running in a matter of weeks, has enabled us to work with leading restaurant brands who are engaged in rapid worldwide expansion," David explains.

So what exactly does H&K manufacture or supply?

"We provide more than 7,000 different items," David says. "Our product list runs from meat freezers to stainless steel food preparation tables, warming bins to drinks systems, cup dispensers, ventilation hoods, grills and fryers and more."

But David did not start out in the restaurant business. Originally from Dublin, he was educated in Newbridge, Co Kildare, before going on to study business at Trinity College Dublin. His sights were set on becoming a chartered accountant and so he took up a position with accounting firm KPMG.

While there, he worked hard but just could not seem to pass his accountancy exams and so, after failing four sets of exams, he finally left. He was unemployed for the next year before eventually qualifying as an accountant in 1985, when he joined H&K, on what was supposed to be a two-week assignment.

"I was so delighted to be working again," David says. "But I never imagined that one day I would end up taking over the company." That is exactly what he did.

H&K was originally set up in Canada in 1975 to supply kitchen equipment to restaurants in Canada and the US and was later enticed by the IDA to set up an operation in Ireland.

But, by the time he joined the company, the business was losing so much money that David feared it might not last another six months. However, it did survive.

Quickly recognising his ability, the then CEO, Brian Ranalow, began sending the young David to areas in the business where they were having problems. Over the next 10 years he developed a reputation in the firm as a man who knew how to get things done.

"I worked hard," explains David, "to both challenge and change the long-held belief that this was simply an engineering business. I could see greater opportunities to become a 'one-stop shop' for customers by providing more integrated solutions and better management processes."

But first he would have to get into a position to influence the future direction of the business. His chance finally came in 1996 when he was appointed as the company's managing director for Europe. His innovative and ambitious approach worked and the European business performed so well that, soon afterwards, he was appointed global chief operations officer.

The defining moment came for him in 2002 when the then owners decided to exit the business and David led a management buyout that would see him become the largest shareholder and chief executive of the company.

"I thought at the time," says David, "that if I could just turn the business around, it would be like winning the lottery."

But it wasn't going to be so easy for the new CEO.

Within 10 days of taking control of the business, disaster struck. McDonald's strategy suddenly changed. The company decided not to open any more restaurants. Because H&K specialised in fitting out new restaurants, it lost 85 per cent of its entire business almost overnight .

"It was a complete shock and a watershed experience for me," admits David. "It hit me really hard when we had to close the manufacturing plant in Dublin and lay off 90 staff."

But it made him even more determined than ever to make a success of the business. He quickly got to grips with turning the company around by repositioning it to target the maintenance and remodelling of existing restaurants. He then went to work on developing his "one-stop shop" model and, before long, the company was providing a full range of services including initial kitchen design, steel fabrication, installation, project management and a new spare parts and aftercare service.

"We also spread our wings to new markets and developed manufacturing and service operations in 13 countries including the UK, Spain, US, Canada, Australia, Mexico, and Indonesia," David explains.

Like most entrepreneurs, he is quick to point out that he did not do it alone. "Team is what it's all about for me," he says, emphatically. "A company is only ever as good as its people and I've always focused on getting the right people on the team, and then encouraging and supporting them to develop within their roles." Whatever his management style, it definitely appears to be working.

Today, the company employs 1,200 full-time and 300 contract staff throughout the world. It supplies more than 20,000 restaurants in 80 countries, of which 15,000 are McDonald's and the remaining 5,000 are made up of leading names such as Burger King, Subway, KFC, and Pret-a-Manger. This year, the company's turnover will hit a staggering €380m.

So what then have been his proudest moments in business?

"To see the company recognised twice, out of the past three years, as the best supplier to McDonald's worldwide," he answers, proudly. And he is proud too of having retained a strong Irish culture throughout the business.

"So what about the future for H&K?" I ask.

"We are now focused on emerging markets such as Asia," he explains. "China currently has more than 1,200 McDonald's restaurants and they are opening new outlets at a rate of 300 each year."

So there are still many opportunities for growth in the business.

A strong family man, with a passion for sport, he hits the gym most mornings and feels this gives him the energy and clear thinking he requires to run a worldwide company. "Business is like playing rugby," he adds, "where you have to fight for every yard gained."

David has certainly gained yards over the years, if not miles. I could not help but be truly inspired by a man who led his company back from the brink of failure in 2002 and then went on to build it into the global success story it is today.

His achievement goes to prove that Napoleon Hill was right after all.

Sunday Indo Business

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