Keeping it all in the family
Interview: Superquinn founder Senator Feargal Quinn never had any plans to sell the highly successful business, he tells Nick Webb. He likes it too much, and so do his children, and they want it to remain an Irish family business
'DO YOU know the rules about wearing pink?" says Feargal Quinn in a stern voice. A little girl and her mother look somewhat shocked. "You only get a doughnut if you wear pink," he says, handing over a doughnut voucher to the pink-clad girl. There are plenty of free doughnuts to be doled out. If you see lots of fats kids loitering outside Superquinn, chances are that Feargal is doing the doughnut run again.
Being nice to your customers isn't always the right thing to do. Recently he leapt out at a woman pushing a small child in a trolley, offering doughnuts. It nearly got messy. "Do you know know how close you were to getting a belt in the face?" she said.
We sit in the café of Superquinn Walkinstown, in the Dublin suburbs, as Feargal tells his story. There's a copy of his book, Crowning the Customer, waiting downstairs, to ensure that his name is spelt properly. He's seen almost every variation on spelling at this stage. Even the Marketing Institute, of which he is president, can't spell his name right. They gave him a pen engraved with "Fergal".
Superquinn is a private unlimited company, which means that financial information is as rare as a hen in a tooth brace. Observers have figured that Superquinn had a turnover of up to £395m, with profits of about £20m. It seems those figures might be wide of the mark. "We would be unhappy if our sales were less than £500m," he says to the sound of a jaw dropping open. "Net margins in America are about 0.9 per cent, in Europe it's coming through at about 1 per cent and in Britain it comes through at about 6 per cent. Margins in Ireland are much lower." Quinn is a slippery guy when it comes to revealing financial information.
Over the last three or so years there have been persistent trade rumours that Superquinn was up for sale. "The company has never been for sale," he says firmly. "It's a private company, a family business. There are two of my children already in the business and the sense I get from them is that the commitment to remain as an Irish family business is as strong as it ever was." Did he ever think of selling it? "Never. There was never a time." And he doesn't plan on selling it in the future either. "Not in my lifetime. I don't see any need to. I enjoy it and I have as much as I want to get out. We don't take much out. I'd much prefer to see the company build."
Quinn is 64 now and looking to the future. "We have a succession plan. We joined a family business council some years ago when we realised that we hadn't really thought through what happens. We formed a family business council that meets to discuss these things. We've seen enough Irish family businesses fall out after the founders left. We hope it won't happen but there's no guarantees."
Quinn is also lashing out £35m on a spanking new chilled distribution centre. The giant cooler is taking shape in Blanchardstown and will be up and running by next January. It's a hefty risk. "We're certainly at a crucial point in the history of the company. We've always borrowed money but we'll be borrowing more money than we've ever borrowed before." Quinn estimates that instead of making 500 deliveries a week to its 19 stores the new distribution will slash the delivery numbers to about 100 per week. The cost savings are only massive.
It's not exactly an original idea. "It was tried before by Albert Gubay in 1976. It didn't work." Despite its shaky track record, Quinn is fairly confident. "We believe we've judged it differently. We're doing everything differently."
The centre will cost £1m per month to run but he thinks it's worth it.
"If we don't do it we won't be around in 10 years' time. Because customers wouldn't stick around if you kept letting them down by running out of stock, and somebody will have a more efficient way than we have."
Quinn is quick to admit that he's made mistakes borrowing before. "I made one error in financial terms. When I went to the bank to borrow money the first time I was over-careful and I didn't promise to pay them back as quickly as possible. I misjudged it." He hadn't realised the benefits of cash flow, he says. "I made the same mistake five years later."
Superquinn is only a tiddler on the world stage, which could have led to it missing out on economies of scale. "We felt frightened about seven years ago, when there were a lot of amalgamations and bigger companies coming in. We thought how will we compete if we can't buy as well as some of the bigger companies?" It signed up with a pan-European supermarket grouping called AMS. The 23,000 outlets served now have "serious buying clout", he says.
Tusa, Superquinn's joint venture with the then TSB, is still rumbling along. Quinn doesn't seem to be a complete convert yet: "I was very anti-banking at the start." Although 15 branches have opened, he says, "There's fierce competition between the grocers and Tusa for the space." The joint venture has yet to wash its face. "It's only in its first 18 months. We wouldn't expect it to make a profit in its first year." Quinn is reasonably satisfied. "We've a high share of the new car loans and a high share of the government savings. What we haven't succeeded with yet, and what disappoints me, is that we haven't persuaded customers to use the laser card." He adds, "It's meeting expectations in certain areas."
As far as further expansion goes, Quinn says, "We think we're capable of having 25 [stores] and we think our management team is capable of having 25." The company has sites in Bray, Clondalkin, Limerick and Galway.
Another possible growth area is in mini-Superquinn stores. The company is involved in a joint venture with Texaco to develop petrol station supermarkets. The first SuperQ has just opened in Raheny, with another one opening at Merrion Gates. Quinn believes that if the pilot scheme works then up to 170 stores could be developed with Texaco.
Despite the collapse of Webvan and other giant Internet home shopping services, Quinn says that Superquinn's own Internet shopping service is in good shape. "It's doing fine. It was slow to start. We were poor at starting in some ways. It's not profitable yet." Even though Internet shopping as a business idea is about as popular as the plague, Quinn is optimistic. "I think we'll be disappointed if it doesn't turn a profit a year from now. We've set a target of the end of our financial year in April."
When you think of Feargal Quinn, you think of smiles and jollity. He's kind of like Willy Wonka on speed. But he wasn't quite so jolly when the "hello money" controversy hit the front pages. Superquinn had been tapping some suppliers for cash in return for giving them access to a new store in Dundalk. It was a PR catastrophe. "I'm annoyed with myself. I'm annoyed that I mishandled it and had difficulty understanding. I didn't see any real difficulty between seeking the best price from the supplier on behalf of the customer in whatever way you do it, whether you get it in discount or in payments. I didn't see a difference between that. I don't have a problem with what we were doing," he says.
"We didn't break the law. We found a way to ensure we didn't break the law. But it was embarrassing and I didn't handle it very well." For a while the "hello money" wiped the famous Quinn smile clean away. "On a personal level it was difficult to accept criticism because I had grown up without having criticism. It was a bit of a shock to me. But I didn't have a problem with it except that everyone seemed to have one."
As if running a supermarket chain wasn't enough to stop him fidgeting in his seat, Quinn is also a member of the Seanad. He figures that the Government will last till next June and his name is likely to be on the NUI ballot sheet again. "Yes, my intention would be to go again."
Superquinn began in Dundalk in November 1960, with a small shop bought with a bank loan. Having left UCD, Quinn travelled to France with a view to getting into the hotel business. Instead he spotted a trend in self-service shopping and decided to bring the principles back to Ireland, tweaking a bit here and a bit there. It seems to have taken off.
It's hard to get Quinn off the shop floor. During the photo session, he breaks off to chat with any passing shopper. A man tells him that the melons are too small, which has him on the defensive. Feargal knows his goods and it's not just from work. "There's a rule in the company that the male executives the female executives do it anyway have to do their own shopping once a month. My wife is thrilled and annoyed whenever I do it."