Novus Focus

Novus Focus

As Novus continues to expand its food-led operations, CEO Toby Smith talks pizza, spend in the City and the vitality of the night time industry

Having arranged to meet Toby Smith at the Mincing Lane Tank & Paddle site in the City of London, I hadn’t quite realised just what a challenge an on-time rendezvous was going to be.

Not only couldn’t my Google Maps-reliant/enfeebled brain locate the venue that opened in November 2016, but I had also failed to predict just how busy a Friday lunchtime service was going to be, inhibiting my ability to spot the Novus CEO.

Lunch in the City is still very much a booming day part, particularly for a concept such as Tank & Paddle. There are hundreds of office workers sharing pizzas served on paddles, clasping glasses of craft beer that’s been poured predominantly from the Meantime tanks adjacent to the bar. It’s a smart, stylish and simple proposition that has pretty much worked from day one.

Smith tells me that Tank & Paddle is the perfect partner to its neighbouring Balls Brothers restaurant in this part of London, as the two different concepts attract two types of City slickers. Tank & Paddle, he says, is full of people who are picking up the bill themselves.

However, in Balls Brothers, the historic restaurant and wine bar that Novus acquired in 2011, diners are living on expenses, ordering at will and enjoying a bit more of a leisurely lunch. Between the two brands, Novus has the area covered.

It still feels a little strange associating Novus, the bar and nightclub behemoth, with restaurants (although Smith insists that’s not what Tank & Paddle is). For so long the business has been known for having one of the most enviable nightlife estates in the country, with its bar portfolio completed by the renowned Tiger Tiger clubs. Its PR and marketing of late would have you assume that Novus’ food-led operations were the priority going forward, but in actual fact the bars and venues arm of the estate still accounts for 80% of its turnover.

“It’s a very important part of the business,” says Smith. “The bar and restaurant sites have some way to go to catch up to the bigger parts of the estate like Sway and Forge. Tiger Tiger in London can do over £300,000 a week. They’ve got some catching up to do if they want to reach those heady levels.”

True. But it’s worth highlighting some of the impressive numbers coming out of Tank & Paddle. Last December, the site where Smith and I chat sold 5,000 pizzas and 11,000 pints of tank beer. Not bad for a venue that used to be a nightclub. Those are numbers that some casual dining pizza brands would be proud of.

“We were changing a nightclub into a brand new concept, and it was off the beaten track, so when we opened the doors we had to have a statement about value,” Smith explains. “These customers have to be able to visit multiple times a week or month – it’s not for special occasions. We built the model based on margins that were profitable to us from day one. We targeted between £5 and £5.50 for a pint, and pizzas between £7.50 and £9. Someone could come in and share a pizza, have a non-alcoholic drink and spend £6 on a Tuesday. That beat Pret, Itsu and Subway – it was better value. Then we focused on the speed. We put a triple deck oven in that cooks in 140 seconds. The first Tank & Paddle, 16 months in, is without doubt one of the most phenomenally successful businesses I have been involved in. It really is quite staggering what it’s able to do.”

The digital age

During our time at Tank & Paddle, we observed that not one of the lunchtime dwellers in this City site paid with cash. When ordering food and drink at the bar, contactless payments merely added to the speed, efficiency and turnover of the venue. In fact, the overall digital operations of Novus are something to be admired.

The support team for the late night venues is now made up entirely of digital marketeers, who spend all of their time on their laptops. Over the past couple of years, Novus has completely changed how it markets itself. You’ll find no posters or flyers promoting each site, no old fashioned collateral.

By utilising the Novus Customer Experience Dashboard, which analyses customer feedback and data across numerous channels, including social media, review sites, surveys and point of sale systems, the teams from head office and each site are able to react in real time, learn from the data collated and market the business accordingly.

Novus is able to gauge average positive and negative sentiment, together with customer survey results, plus Facebook and Twitter algorithm scores. There is also a league table, which pits each venue against each other, ranking them on the highest customer experience scores.

“How we score on social is not about how many tweets we send out – it’s how many follow, like, retweet or actually like something we’ve put on Instagram,” says Smith. “It’s not about firing out content and hoping someone reads it.

“Data is also very important, and with GDPR we’re having a good look at it and looking at the quality, rather than the numbers. We’re looking at engagement, not just how many there are. Data now needs to be about quality and people who want to be a part of our network. It’s a big change.”

These technological advancements and legislative changes are of particular importance to the late night sector, where a substantial proportion of sales come in through customers looking to pre-book at a venue. The combination of crucial pre-booked sales and a forward-thinking digital strategy has allowed Novus to absorb part of the ever-increasing financial pressures that come with a central London bar estate.

“Pre-book sales are still over 40% of our sales, but we’ve moved a number of those platforms to the digital side of things, so we need fewer people doing that,” explains Smith. “You always have to look at ways to achieve savings throughout P&L. Rates were never welcome, but weren’t as high on the agenda as rent. But the latest rates changes are just inexplicable. We had a business in Mayfair where the rates went up by 60%. Even in Mayfair, the elasticity and price can only stand so much increase. That is challenging.

“The flip side is that London gives you an economic climate of people who go out and eat and drink a lot. The macroeconomics in this city allow us to be successful if we’re good enough. We have to focus on operational intensity and whether we can deliver profitability from our sites. We have looked at non-profitable trading sessions and unashamedly said we’re not going to open the doors at those times.

This means fewer hours a week, but more profitability. The positive is that we have the ability to grow turnover because of where we are – we’re not reliant on local economies. I don’t have any examples in the estate where we’re not successful because of the property costs – if we’re not successful, it’s because we’re not good enough. If you get it right, the profitability you can drive out of these businesses is huge, as they are fixed cost businesses. We have property costs, team costs, security and entertainment – once that’s paid for, like-for-like sales growth within those businesses converts very well.”

Up at night

If you happen to follow the Night Time Industry Association (NTIA) on Twitter, you’ll be aware of the struggles, successes, victories and vilification that this part of the on-trade consistently experiences. The latest retweet I saw from the NTIA was on how consistent gig attendance can help you live longer, which can only bode well for yours truly.

When I ask Smith about how he views the current state of the night time industry, he uses his answer to compliment some of his peers, who have voiced the same praise and persuasion for this part of the sector when speaking to the team at Pub & Bar over the years.

“There is a number of really good, focused late night operators who are doing things really well – Deltic, Stonegate, us, the guys at Be At One,” says Smith. “I actually think, as a general rule, that it’s in pretty good health. People are seeing the success they deserve. Over the past two or three years, there has been more investment than was seen in the previous decade. If Peter [Marks, CEO of Deltic] goes in and spends £1m on a Pryzm, every other bar in that area gets a lift because Peter has gone in and done the big club. Stonegate has Popworld, which is very successful and works really well for them. I think customers are very committed to what is now a high quality night out.”

London and the bigger cities are particularly relevant when considering that last point. Those aforementioned pre-booking sales will usually incorporate a premium package of sorts, with private booths including bottles of high-end spirits or bottles of fizz. However, with most of those occasions, the night doesn’t begin at the booth, as Smith points out.

“If you go to most towns and cities at 9pm, if it wasn’t for bars and nightlife, there would be nothing there. It would be closed. If you look at the casual dining guys who are doing well, they’re a part of someone’s night out, who then moves on to bars or clubs. These sorts of businesses can complement each other. Crucially, because of the good work that some of the trade bodies are doing to highlight that, it shows how important the late night economy is to their towns. Look at Sadiq Khan – he is saying that [nightlife] is crucial to him having a 24-hour city and wants to know what he can do to support it, rather than restrict it.”

Should legislation continue to restrict and diminish the night time industry, by no means does Smith see that as an excuse for failure. In Tank & Paddle and Balls Brothers, Novus has two brands that can continue to grow and flourish away from the trials and tribulations of after dark operations. However, the heart of the estate still pumps with the beats and flow of nightlife socialising. While Smith and the Novus team will continue to do their bit to support all efforts to promote and grow this part of the industry, ultimately he believes success is in their own hands, and if it doesn’t come, they have only themselves to blame.

“We’ve done some stuff with Amy Lamé, the Night Tsar, and we’re super supportive of anything that supports and listens to the sector. The 24-hour tube is a massive move for the city – that has been a big benefit and has certainly helped the West End. We all want a vibrant economy that helps bring people in, but then it’s about us being better. That’s down to us. We don’t want the economy to be the deciding factor – we want whether we’re good operators or not to decide how successful we can be.”

Tank & Paddle and Balls Brothers

“We have three Tank & Paddles now, and we’ve probably got another couple of opportunities within the existing estate. Equally, we’re only in Zone 1, so we’d be keen to explore outside of that. We’re delighted with it so far.

“What we’ve done over the last two years is focused on the other parts of the business. In 2015, we were down to four Balls Brothers sites – we’re now back up to 11. This business has been going since 1860, and we came to a crossroads where we either let it go or rebuilt it. We were driven by the team within Balls Brothers, and were happy to take on the mantle of rebuilding it.

“We initially identified sites within the estate to convert and did a handful of those, and then bought some businesses [Rocket restaurants] in January 2017. We’re now up to 11, and it’s no secret that we’re actively looking for new sites for more.”