Still buoyant in choppy trading waters — and it’s not just fish
Largest sushi firm outside Japan is thriving
TIP number one: don’t tell the boss of YO! Sushi you’ve never eaten there because you don’t like seafood. Richard Hodgson, who’s been leading the casual dining chain for two years, administers a good-natured telling-off: “Sushi just means ‘with rice’. We wrap rice around not only fish, but also ingredients like chicken, tofu and avocado. The frustration is we sell so much more than just raw fish.” That’s me told.
The boss of the chain, known for its food-laden conveyor belts that snake around restaurants, isn’t just grappling with f i s h-fe a r i n g c u s to me rs . Th e 49-year-old rattles off headaches from soaring business rates “which the likes of Amazon and Deliveroo are not paying”, to high rents prompting many rivals to close sites.
But the Yorkshireman doesn’t look too worried as he tucks into beef teriyaki and salmon nigiri. Sitting in his firm’s Knightsbridge branch, which is in Harvey Nichols, he says: “In what is a pretty challenged sector at the moment, we are more than holding our own and trading better than a lot of our peers.”
Forthcoming accounts will show UK sales at 72 restaurants edged up 5% to £89 million in the year to November, and losses of £7.3 million, albeit narrowing slightly. But Hodgson predicts stronger growth for a chain in its third decade after opening in Soho in 1997.
His plans include rolling out concessions within Tesco and opening YO!’s first venue without its signature conveyor belt, of which more later.
Then there are overseas markets: since owner Mayfair Equity Partners appointed Hodgson to the helm, the firm has become the world’s largest sushi company outside Japan. It agreed
a £59 million acquisition of Canadian sushi chain Bento, and bought Taiko foods, which supplies pre-packed sushi to supermarkets.
On top of that, this month YO! merged with Snowfox, the US operator of 700 sushi kiosks. The deals flurry created a group, led by Hodgson, with an enterprise value of around £317 million. “There is a real opportunity for Japanese food to explode over the next few years,” he reckons.
Hodgson has been in food and restaurants for his entire career after reluctantly accepting he “wasn’t quite good enough” to play for Leeds United. After university he was a graduate trainee at Homepride’s then-owner Dalgety, before joining Asda in 1996 as a tea and coffee buyer.
Early successes propelled him onto the board as marketing director before he reached 30 and there’s still a loyalty to the old shop: he thinks its collapsed merger with Sainsbury’s would have helped bring down customer prices.
Waitrose came knocking a decade later. As commercial director, Hodgson’s highlights included getting celebrity chefs Delia Smith and Heston Blumenthal together in a London wine bar to create new meals for Waitrose and star in TV adverts.
He also worked at Morrisons before he got his first chief executive gig at Pizza Express in 2013. He oversaw a sale of the chain to Beijing-based privateequity firm Hony Capital the following year for £873 million.
Pizza Express “was a really exciting place to be” with huge expansion in Asia. Zoe Bowley, his former colleague there and now the UK boss of Pizza Express, praises his “enthusiasm and creativity”. Bowley also says he’s been known to belt out Eighties rock classics in the odd evening at karaoke chain Lucky Voice and “he genuinely thought he was singing to a crowd of 30,000”.
But it wasn’t all sweet music at Pizza Express. Gradually “it got harder”, and he points to the tougher competition in a crowded market on top of the rising burden of higher rates and rents. He left by “mutual agreement” in early 2017 as Hony was eyeing growth in Asia and he didn’t fancy moving his young family to China. He moved to YO! that year.
Hodgson supports his current employer’s decision to back international expansion at YO! as the new sources of revenue could help offset potential difficulties such as sliding consumer confidence. But unlike some private-equity owned groups, YO! is “not under the same pressure to open lots and lots of restaurants”, because it has diversified into different businesses.
He’s also a Remainer who says Brexit isn’t a significant worry for trading, although he does think the uncertainty some of his European employees have had to face is “appalling”.
One irritation he has is with controversial company voluntary arrangements, a restructuring model which has allowed chains such as Giraffe and Prezzo to close sites or seek rent cuts. Says Hodgson: “I understand that no firm would do a CVA lightly. But it does mean you end up with an unlevel playing field. It is not very nice to know you could be paying 140% more than the restaurant next to you. That is frustrating.”
Despite difficulties in the industry, YO! is still focusing heavily on Britain. Hodgson reels off several investments: kids can eat free, an Ashford site has just opened, and “grab-and-go” shops are also potentially in the pipeline.
A nationwide roll-out of concessions in the UK’s biggest grocer is planned from next month as Hodgson wants to “get more people to d i s c ove r the delights of Japanese foods”.
Getting into Tesco “makes a lot of sense”, he thinks. Meanwhile YO! will soon open its first branch, in White City, to not feature a conveyor belt. The firm wants to investigate if that means people spend time in the restaurant differently, such as whether more diners stay for a leisurely lunch rather than a quick bite.
One observer left impressed with YO!’s transformation and Hodgson’s work is entrepreneur Simon Woodroffe, the brains behind the original venture 22 years ago.
Woodroffe says: “I am in awe of Richard’s regard for my original child. He even showed me a slide once in a business presentation that said the “next 20 years”. Not many businesses have that.”
Mayfair is unlikely to be around for that long, having owned YO! since 2015, with a sale the most likely exit.
Hodgson, who lives with his wife Vicki and their three children in Buckinghamshire, is less distracted by that, saying: “I want to fulfil the vision of building a truly international business. I’m excited about the future.”
He adds with a laugh: “I promise you. It’s not all about fish.” We believe you.