The restaurant business is highly competitive, with famously tight margins, and few entrepreneurs make real money out of it. But Paul Campbell, who does, knows all about tight margins. He learnt the hard way as a 17-year-old street trader in Ilford.
His father owned three hardware stores in Essex and London, but it was always a struggle to make ends meet. So from an early age Paul would help when he could, cashing up at the end of the day and putting up the shutters at night. For this he was paid in "love and pocket money" mostly the former. So to boost his income, Paul, now 44, decided to work for himself at weekends. He took some stock from his father, on credit, and set up a market stall in Ilford with a friend.
It was the early 1980s and Rubik's cubes, part of his father's inventory, were all the rage. Paul and his friend decided to concentrate on selling them, but unfortunately a competitor had set up a stall nearby with precisely the same idea. Clearly, two stalls selling Rubik's cubes next to one another would not work.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"We took the strategic decision to undercut the opposition for next to nothing," says Paul, "you know, 10p a cube. They must have thought it ridiculous. They were about ten years older than us and saw these two 17-year-olds walk in and ruin their business for a 5% margin."
But it worked. They sold hundreds of cubes and outmanoeuvred their competitor. It was Paul's first lesson in the importance of getting the price right.
After taking a history degree at Manchester, Paul trained as an accountant with KPMG, before looking after a chain of health clubs. In the process, he made a bit of money, but not enough. He had watched his father struggle to stay afloat in the 1970s and was determined that wouldn't happen to him. So, in 2000, he joined PizzaExpress, where the brother of an old friend was looking for someone to join the board. David Page had worked his way up from dishwasher to one of the owners of the group, and knew the business like the back of his hand. "I'm not an operator, whereas David is," says Paul. "So we complemented each other very well."
When PizzaExpress was sold in 2002, the two men decided to go it alone. They set up a company to invest in and develop successful restaurant chains and raised £14m on Aim. Their group, Clapham House (CPH), bought the Real Greek Food company, the Bombay Bicycle Club and, in 2004, their most successful brand yet, the Gourmet Burger Kitchen.
"The great thing about burgers is that they're such a universal product," he says. Gourmet Burger Kitchen is already up and running in Dubai and Turkey, with plans to move to Hong Kong in the next year. And with a "price point of £10-£15" a head "not so expensive that you're pushing people" he reckons Clapham House, which turned over £45m last year, is well able to ride out the current retail downturn.
-
Are US stocks too expensive?US stocks have rallied since Donald Trump's election win, but starting valuations are so high that analysts forecast weak performance over the next decade
-
Ofgem proposes new energy tariffs with low or no standing changesStanding charges have invited public backlash as households battle high energy bills
