Feature: Turning a Profit, Chickpea Group

Tell us about the Chickpea business.

At Chickpea, we have nine pubs across the south west and a standalone pizza shop too. Of our nine pubs, seven have bedrooms, and we are close to submitting plans for 19 bedrooms at another. These are a mixture of freehold and long leasehold.

We also operate a group of five wet-led pubs outside of Chickpea. These are tied and tenanted pubs with Stonegate. We have three in Salisbury, one in Bath and one in Marlborough.

Would you say running multiple sites is key to profitability?

I wouldn’t say it was key, but there are definitely a few efficiencies we benefit from as a result of having multiple. This is mostly from an operational perspective. Having a number of sites means we can invest in a fantastic central team who can offer our GMs, AGMs and head chefs proper support, who in turn can focus on the important things like banging out great food and delivering brilliant hospitality.

We also make savings with regards to pub maintenance. Having a few places means we have our own in-house maintenance team and they have a pretty thorough approach when it comes to preventative work. It’s hard to put a figure on it, but we’ve probably saved hundreds of thousands in the last few years just by regularly doing things like clearing out gutters frequently and hoovering fridge filters. 

Chickpea's nole pizza brand

From a procurement perspective, we are slowly making better use of our buying power and negotiating some nice deals with our suppliers. That said, our food menus are pretty varied from place to place, and in the interest of giving our kitchen teams autonomy over how and what they cook, we seem to be suffering from increasing food costs in the same way as many single-site operators.

Despite the above, there are also some benefits to having just one site or a couple. Managing the smaller costs becomes tricky the more places you have, and these add up quickly and become difficult to manage.

Which area of the business is currently being squeezed the most and how are you coping with that?

I don’t think there has been a part of the business that hasn’t suffered from rising costs in the last year or two. The main area is obviously people, with the cost of employment increasing hugely since the most recent Budget and we are tackling that in a number of ways. Firstly, we are offering our GMs pretty generous financial incentives to meet a number of financial KPIs, with the main one being labour. We’ve also done a lot of work on our menus, and in particular looking at ways our kitchens can work more efficiently during quiet periods of the week.

Finally, we’re embracing new technology where we can improve our reporting and this seems to be paying dividends – our teams can now access flash margins, which helps inform a lot of decision-making when it comes to scheduling and ordering.

It’s a bit of a minefield at the moment, but my view is that the trading environment isn’t going to get any easier and so we are preparing ourselves as best we can to continue growing sustainably and profitably. 

Ethan Davids

How are you balancing the challenge of rising food costs and the potential of passing that onto the customer?

Truthfully, operators like us have very little choice but to pass the costs we are facing on to our guests, but it is unrealistic to expect our guests to pay the full brunt without seeing an improvement in their overall experience.

One of our core values at Chickpea is being standards-driven, and I am firmly of the belief that if we aren’t improving things then things are getting worse. This has meant that while our prices have increased across the board since April this year, I am confident that our guests have also received better food and better hospitality. 

It’s forced us to hone in on the detail when it comes to guest experience and as a result I think we have improved.

Which area of the business is the biggest cash generator? Why is this?

Our wet-led pubs continue to perform very well in the current climate. They are very cash-generative too, which means we have been able to use these profits to fund Chickpea growth in the last few years.

The reason for this is pretty obvious – it is easier to offer excellent hospitality with fewer people, and having no kitchen makes a difference! Having these pubs has been a strength in terms of balancing the curve of seasonality too – when our Chickpea sites are a little quieter in the winter months, our ‘boozers’ trade quite well.

From a cash flow perspective this is great for us, and it also means we are able to keep brilliant people on board during the off-season and offer them hours elsewhere.

Food and drink at Chickpea

If you find a dish, event or approach starts bringing in good money, do you look to replicate it across the portfolio?

Yes, and quickly! Being the size we are means we can make changes quickly and we are naturally quite scrappy in our approach to testing things out and sacking them off if they don’t work. For example, we’ve hosted a number of events this spring/summer and these are relatively new to us, but with the weather being as good as it has been we’ve been quick to get a few more in the diary so we can continue to benefit.

We’ve also found that our pizza brand sits quite nicely in our Chickpea places. I think it makes our pubs more family-friendly without taking too much away from guests who join us without children. It’s meant that we’ve installed a new pizza kitchen in three of our last Chickpea openings and pizzas have really flown.

What is the one piece of advice you would give an operator who is struggling to turn a profit?

Providing the levels of trade are where they need to be, I’d say just dive into the detail with everything and analyse every line on the P&L. We’ve done a lot of work recently on our purchasing and added lots of controls where they were needed. There’s also some great tech out there which can streamline ordering and stock control. The difference this has made is huge, I just wish we’d done it sooner. It’s not a particularly sexy part of the job but there is something quite satisfying about saving a few quid on six blue rolls. So, yeah, dive into the detail and make sure your blue roll is cheap!  

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