Wednesday 22 November 2017

Aramark's boss on how he will grow Avoca

For years, his company has quietly kept Ireland's hospitals, stadiums and companies fed and running smoothly. But now Aramark boss Donal O'Brien has taken on one of Ireland's best-loved consumer brands

Simon Pratt and Donal O’Brien in Avoca. The secret behind the chain’s huge success in selling food and fashion is an approachable blend of stylish tradition and far-sighted appreciation of what is trending on the lifestyle pages. Photo: Gerry Mooney
Simon Pratt and Donal O’Brien in Avoca. The secret behind the chain’s huge success in selling food and fashion is an approachable blend of stylish tradition and far-sighted appreciation of what is trending on the lifestyle pages. Photo: Gerry Mooney
Sarah McCabe

Sarah McCabe

From a quiet, nondescript office on the Northern Cross in Dublin, Donal O'Brien is plotting the world's next lifestyle empire.

His company, Aramark, which bought food, clothing and homeware company Avoca from Wicklow's Pratt family last year, wants to take the quintessentially Irish brand to the UK, US and mainland Europe.

New York-listed multinational Aramark employs 270,000 people around the world, 6,000 of them in Ireland, making it one of the country's biggest employers.

O'Brien (57) runs its northern Europe operation, including Ireland, the UK, Norway, Denmark and even Dubai, and is responsible for around $1bn in revenue. Aramark provides outsourced services, like facilities, property management and food services to retail chains, hospitals, schools, companies, events and even oil rigs.

As a business-to-business service provider, it operated, until recently, largely under the radar in Ireland.

"Aramark is a business-to-business brand," O'Brien told the Sunday Independent.

"The business community is very aware of who we are but we are not a business-to-consumer brand. We try to work seamlessly with our clients, so that when you walk into a hospital or an office that we're in, you're not going to see Aramark everywhere. We are just seamlessly embedded."

Public awareness changed with the purchase of Avoca for in excess of €60m, one of the most talked-about deals of 2015.

"Avoca is a customer brand and a very strategic investment for us. It is nationally recognised and has very high brand awareness as probably one of the most successful casual dining names in the country.

"It's been a family-run business - and the thing for families is access to capital so they can continue to expand. That was the opportunity we could see in our discussions with the family, that they had great ambition in what they wanted to do, and by us combining our resources, we could unleash that potential and allow that to go ahead because we have access to capital.

"It wasn't something that we planned. In fact, it was quite interesting how it happened.

"I know Simon Pratt (Avoca's managing director) for a long, long time.

I approached him a year ago, really just to see could we work together on doing something with a couple of my accounts. And in that discussion, he said they were at a stage where they were looking to sell the business.

"Everything led on from there. We weren't going in to buy it, it was to work with him or see could we do some kind of licensing agreement, but it went from there. It was really exciting and very interesting."

Aramark's research found that the Avoca model would work all around the world.

"This concept is hugely acceptable to people internationally," the Aramark boss said.

Not because it is Irish - because it is "aspirational and contemporary" in the same vein as Anthropologie in the US or Britain's Liberty.

"The other thing that came across is that it is extremely accessible, it's not snooty.

"Liberty could have a little bit of that - 'Should I be here? Do they think I can afford this' -But you never get that sense in Avoca. Anyone can walk in."

The expansion process is already well under way. A 12th store, the first under Aramark, is opening near Dunboyne in Meath, not far from O'Brien's home in Ratoath.

Sites in Cork, Limerick and Galway are being considered, although nothing has been bought or leased yet.

UK locations are also being scouted, in the Home Counties, not too far from London. "That's right in the middle of planning right now. It's not a question of if, it's when," he said.

The plan, O'Brien explained, is to set up a centralised kitchen somewhere in that region and then open radial outlets.

"It's about getting the right locations because you have to be so thorough, these are 20-year commitments."

The company's central Irish kitchen is in Bray. "We still have capacity in it, but we are looking at opening another," he said.

There's no set number in mind for store openings and Aramark has deep pockets.

"The type of investment we're making in each new store is similar to what we would spend if we were to win a large contract in another part of the business. It's what we do, so the company has access to the capital to allow it expand naturally.

"It's a scalable business model and we just have to let it take its course. There is no question that it is scalable because the Pratts have already done that here."

Elements of Avoca are being rolled out in other parts of Aramark's business, like its wholesome take-home meals. They will be made available in some of the corporate canteens that Aramark runs.

"One of the things that has fascinated us about Avoca is their take-home meals.

"The speed and growth of that has been just phenomenal.

"It's not that it's going to be ubiquitous on every corner, that would be the wrong thing to do. It will be done selectively."

Its insights into the changing Irish palate are also being applied company-wide.

"It's very strategic for us because we have a very large food business in Ireland, we'd be one of the biggest food-service operators in the country, from industrial sites, hospitals, universities to large places like the Guinness Storehouse," said O'Brien.

"The Irish consumer has become increasingly aware of ethnic foods from all over the world. It has just exploded and the pace of change is frenetic.

"There's a huge influence now to do with street food, people are into grazing and eating as they are doing other things. There has been an emergence of Mexican and Middle Eastern dishes - and you see that reflected in the counters of Avoca."

Taking over one of Ireland's best-loved indigenous brands requires sensitivity and selectiveness, he is quick to point out.

"We've to be very careful with the Avoca brand." Aramark group CEO Eric Foss was clear on that. Foss, he said, is "a huge supporter".

"He was fully behind it. Eric's background is from Pepsi, he is a real brand guy, he understands brands. His view was that this is an amazing brand, an amazing opportunity - let's keep it that way. We don't want to see Aramark on it, it's Avoca and it stands for what it is. We want to protect that.

"It's Simon's baby. For as long as he wants to, he's the man in there. We will be guided by their insights and understanding. We are very proud to have this brand - but we understand the responsibility and want to do the right thing.

"It's a huge opportunity to get an Irish dining experience overseas and we are not going to mess with that.

"These people understand that intimately. That's what they wanted to do for a long time but of course the cost of doing that is very difficult for a family."

Avoca isn't Aramark's only public-facing business.

The company's Irish contracts include major attractions, such as Croke Park, where it keeps up to 80,000 people fed and watered on match days.

"For us, Croke Park is a fishbowl. It's a hugely important client to us - and also, all of my clients are sitting there, looking at what we're doing, whether we provide a good experience. On a full day there, we will have over 1,000 people working in Croke Park."

Competitors include world number one Compass, Sodexo and Ireland's Kylemore. It is a very competitive market, O'Brien said, though a resilient one during the recession.

"We continued to grow in that period because we helped people trying to fix variable costs. But customers have moved now from looking at how they can contain costs to how we can help them grow their business.

"In the last year, that's been particularly evident in the domestic side of the business," he said.

One of the things he is proudest of is Aramark's customer-retention rates.

"In our business, retention of your contracts is one of the key metrics. These types of contracts are regularly put out to tender. If you are doing a good job, you get re-awarded.

"Our retention rates are into the high 90s. That's very rewarding because you know you are fulfilling your clients' needs.

"In actual fact, two parts of the business had a 100pc - property and facilities management - and in terms of the food side, it was in the high 90s. And a couple of the contracts that left us literally closed down."

O'Brien joined Aramark in 2004 when the company first came to Ireland with the purchase of Campbell Catering. He had previously worked at Campbell Bewley.

Aramark was already active in several European countries but "it wasn't lost on anybody that Ireland was becoming an entry point for American companies into Europe," he said.

"Aramark had a view that expansion wasn't about flags on a map, it was more about being strategically located in key commercial hubs, so that you could expand with your clients."

The company has offices dotted around Ireland, including a call centre in Clarehall that works on facilities management for clients across Europe, a property management team in St Stephen's Green and offices in Belfast, Cork and Limerick. It plans to consolidate most of these into one northside Dublin office, based near the airport and the M50.

"We're looking at three or four locations at the moment, that process is ongoing."

Aramark's HQ is in Philadelphia in the US. It is a Fortune 500 company with revenue of over $14bn and operations in 20 countries.

Sunday Indo Business

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