Former Tragus Reports Rapid Progress and Expansion to 500 Sites

16th March 2015

Casual Dining Group reports rapid progress in plan to double profits – and eyes expansion to 500 sites: The Casual Dining Group (CDG), formerly the Tragus Group, has revealed rapid progress on its plan to double profits from its current platform of 200 “great leases in great locations”. CDG’s three-year ‘platform for growth’ plan focuses on Bella Italia and Café Rouge after the sale of Strada and a “benign” CVA restructuring that meant debt reduced from £354m to £91m, chief executive Steve Richards told the Propel Multi Club Conference. It plans to double profits and create 3,000 new jobs in a self-funded plan that will involve £140m of capital expenditure to refurbish 160 existing sites and add 70 to grow to 270 sites – and then look at doubling the size of the company to 500 venues. It is also looking at rolling-out its Belgian moules frites brand Belgo, which has been “very successful” over the years. Richards said circa 30 refurbishments have already been completed at Bella Italia so far, six months into its current three-year plan for the business. Between Easter and October, a further 65 sites will be refurbished at an average of £300,000 per site – an investment of £19,500,000. The strategy for Bella Italia, which is led by Nick White, involves radical new design, repositioning “brown Bella” into “Bella blue”, moving it out of the crowded Italian and pizza market (“30% of its sales are pizza but it’s not an out-and-out pizza-based business”) and into the family-focused, traditionalists and teenagers-in-groups themed sector, alongside brands such as Frankie & Benny’s. “We want 70 new sites and we have secured 37 so far, primarily in leisure parks, but also concessions and high street locations – and we’re opening six in the next six weeks. Bella was seen as good value-for-money but food and service was seen as only ‘okay’,” said Richards: “We think that it was a great estate but under-invested. It was a really stable business but in desperate need of evolution, especially to get it off the high street. We’ve taken the supply chain out to Italy and up-graded the whole taste experience – and not chased margin. An average waiter was being asked to look after up to ten tables and we’ve cut that down to four or five – a real investment back into the P&L on service.” The brand now has a new leading children’s menu and breakfast menu – and a new coffee, milkshakes, wine and beer offer. Eighteen months into the evolution process at Bella Italia, the brand is in double digit sales and profit growth, said Richards. Bella is the top ‘brand riser’ in the last year on the latest CGA Peach BrandTrack report, up from position 22 to 12 – and the highest riser in the sector in terms of net promoter scores. The company will have 150 Bella Italia’s across the country creating a £200m-turnover business by 2018, but, said Richards, “we think there can be 300 Bella’s and we will take it overseas. There has been a lot of franchising interest.” Meanwhile, Café Rouge’sevolution project, which began six months ago, is more about “recapturing the past to some degree” than “re-positoning”, he said. “That doesn’t sound like a go-forward mission statement but the past for Café Rouge was pretty good. There is still a lot of customer affection for Café Rouge, especially among ladies who lunch but the décor and offer had become tired. It has some fantastic buildings and locations but there hasn’t been much investment over the past 25 years. It’s about taking it back to being hugely popular again with families and singletons. It’s about improving the food choice and the quality – and returning to the hero dishes and the Frenchness of it. We’ve had to replace every single kitchen in the estate and that’s something we’ve been doing in the background. We’ve replaced the cooking platform in every single Café Rouge to enable us to open up the menu. We’ve also changed the supply chain, increasing fresh products by 50% and introduced a new wine list with Bibendum that we think is second-to-none. We’ve also trialed seven “new-look” sites so far. They’re shooting the lights out. They’re not a dial turner in design terms because that’s not what this is about – they’re going back to an authentic French bistro look. We wanted to deliver on the French classics – great ingredients, great classics all the time. We’ve put a lot of work into delivering 15 core dishes fantastically well.” Evolved Cafe Rouge sites have wine displays with overt cellars, fresh bread displays, a patisserie display and comfortable seating, with a stress on creating warmth and snugness. One in Victoria Station now has a rotisserie trial, “which has gone really well”. The brand, led by James Spragg, will see 15 refurbishments starting in May and a further 30 after the summer. “This is probably a year behind Bella in terms of its evolution,” said Richards. There be 100 Cafe Rouges by 2018 – and a franchise has opened in Dubai. The company is also looking at new formats. “We’ve put a new team in place to help us think about how we might use the bistro idea and the Frenchness in different spaces,” said Richards: “We saw it as a very profitable business with a long tail – and food had been dumbed down somewhat but we see great opportunity in this.” Café Rouge is now the second ‘highest riser’ brand on the Peach BrandTrack report, having moved from 30 to position 22. Of Casual Dining Group’s future, Richards said: “We have a vision to get to 500 units. It means Bella can get to 300 sites, international franchising will be important, we’re building a food development centre of excellence to build on our food credentials, bringing food experts into the business to ensure we never let that slip again, we will look at a third brand and acquiring different things.”