Karen McQuade: How I made a million from school dinners

Not many people have fond memories of school dinners. Yet to Karen McQuade and Robert Clark, co-founders of The UK Foodhall, they represented a huge business opportunity. Around 90% of the meat used in school dinners was imported. The pair decided there had to be a niche for a company that only provided British products. After all, "the local authorities who buy the food were always telling us they would prefer to buy British", recalls McQuade. Aside from the appeal of 'localism', "if there is a problem with a chicken imported from Bangkok, it's hard to discuss it with the supplier".

But there were strong commercial reasons for the glut of imported meat. "Foreign food was much cheaper", for one. Perhaps more surprisingly, British food-processing plants didn't have the equipment to make "chicken portions suitable for children". Because chickens vary in size and shape, mass-producing pieces that fulfil recommended nutritional guidelines for children is quite "tricky", explains McQuade. So she tracked down the makers of the specialist food-processing equipment needed, and asked them to let her know should a British firm buy any of this machinery.

In 2007, she got the call. She handed in her notice at a small food importer and teamed up with Clark, a former rival from Bernard Matthews. The new equipment meant British meat could compete in terms of quality and consistency. But it still couldn't compete on price. This was a big disadvantage when trying to sell to cash-strapped local authorities who, on average, spend 80p on the food for each school meal. The pair realised that everyone involved "had to see the benefits of UK meat if the idea was going to work". That meant persuading factories to give extra services, such as samples, for lower costs, while convincing the buyers of the "added value" of British meat.

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To convince customers of the quality of its product, The UK Foodhall became the first food services company to market 'Red Tractor' labelled meat. "Many of our competitors were packaging imported meat in Britain and then calling it British. We went a step further by using labels that proved that our meat was raised here I think it helped justify the price difference." She also admits that the close relationships they had built with local authority purchasers in past jobs was a huge help. "We signed contracts with five local authorities in the first week", selling them chicken and sausages. The collapse in the pound in late 2007 also helped their cause, reducing the gap between the price of their meat and imported produce.

It hasn't been an easy ride. McQuade and Clark worked "seven days a week in the first year and didn't even take a holiday". But it seems to have paid off. Turnover in their first year came in at £1.7m, rising to £3.8m in the second year and £6m this year. They now supplies 62 products to 75 local authorities and have no plans to slow down. The UK Foodhall aims to be a "one-stop-shop" for Britain's 120 main authorities. "Hopefully in the near future we can start providing food for universities and health services, but at the moment we will concentrate on school children."

So is her old employer proud of her success? "I would like to think he is and just does a wonderful job of hiding it every time we meet!"