Two entrepreneurs. Two fast-growing catering firms. One focused on organic growth. The other on buy-and-build. When Alastair Storey and William Baxter joined forces in November 2004, their combined empire dominated seven per cent of the lucrative UK catering market. Real Business caught up with the pair at the BaxterStorey staff restaurant at Unilever on Victoria Embankment.
“Shall we do the interview before we eat?” asks Baxter, gesturing to a table. This is no ordinary staff canteen: the glass tables and olive antipasti would be more at home in a Covent Garden brasserie than an office. But BaxterStorey is no bog-standard catering firm. It boasts the culinary skills of Michelin-starred chef John Campbell and catering contracts with 350 big-name clients such as Barclays, DEFRA, Siemens and ITV.
Baxter and Storey met some 25 years ago. The pair were both in high-level positions at Sutcliffe Catering but frustrated by working for a big, faceless company. “We didn’t know we were both thinking of leaving at the same time,” says Storey. He decamped with colleague Keith Wilson to form Wilson Storey in 2000, while Baxter made his exit with Mike Smith, launching BaxterSmith.
“We toyed with the idea of starting up together,” says Baxter. “But we decided to go our separate ways. Alastair would use the buy-and-build strategy with Wilson Storey and I would set up a business, knock on doors and focus on organic growth.” Within four years, BaxterSmith was turning over £28m.
Storey was a natural entrepreneur too. He made his first deal in 2001, purchasing a stake in £20m-turnover Halliday Catering. “We had no money,” he laughs. “But we managed to charm RBS and they lent us £5m to do the deal.” Over four years, Storey signed off on three separate deals, boosting sales at his firm to £75m in 2004. “That’s when we decided to put the businesses together,” says Baxter.
The catering veterans formed a holding company called WSH and renamed their merged companies BaxterStorey “by popular vote”, says Storey with a wink. BaxterStorey is the largest company in the fold but there are a number of others, each targeting separate swathes of the market. In 2007, the pair acquired catering companies Benugo and Holroyd Howe. They held on to the management teams and broke tough markets in venues and independent school catering respectively. “There’s 14 of us, looking after 30 or 40 clients each. We run the whole company as a board. It’s one man, one vote.”
The shared ownership model paid off. “Three years later, through pure organic growth, we were turning over £175m with profits at around four per cent,” says Storey. Today, the group has revenue of £278m – and the recession hasn’t lessened the pair’s appetite for growth. Storey says: “The past 18 months have been our best ever. Since January, across all the firms, we’ve gained £40m in new contracts.”
BaxterStorey is also aiming to increase its market share to 15 per cent during the next three years. “We don’t need to look abroad. There are so many opportunities over here,” says Baxter. “We’ve made it to south Ireland. That’s far enough.”
Some clients have been tightening their belts, however. “Lay-offs mean reduced headcounts,” says Baxter. “We have to downsize our offering accordingly. But we introduced initiatives to help our customers last year, when we saw problems coming.” One of these is credit crunch cooking. “We taught our chefs to use slightly cheaper cuts so that we could pass on the lower prices to the customer,” says Storey. “You don’t have to use fillet steak, you can use a skirt of beef, slow-cook it and it’s still delicious.”
These little tweaks mean BaxterStorey has kept its edge.“Competition is fierce. What was good enough last year is not good enough this year,” says Storey. “We may be a big business now but we knew from the outset that we would always stay entrepreneurial, nimble and sharp.” It also helps that the stakeholders are all responsible for their own chunk of the business. “We are always attracted to firms that are run by people we have empathy with,” explains Storey. “And we never strip out the management team. They are always people of real stature in our sector, used to running their own companies. They wouldn’t take kindly to being micromanaged.”
Storey and Baxter are quietly confident about the firm’s future. “We hit our annual target by period four,” says Baxter. “We’re aiming for £300m turnover this year. More people are eating in our staff restaurants because its better value for money than the high street. Who’d choose a Pret sandwich over oven-roasted lamb with Irish cabbage and mash potato?” Real Business’s stomach rumbles. “Shall we have a bit of lunch then?” asks Storey, laughing. We thought you’d never ask.