‘My flip from sell­ing piz­zas to steady­ing the ship at Saga’

For­mer Domino’s boss went from piz­zas to pen­sion­ers at Saga. He tells Lucy Bur­ton the over-50s’ favourite will be ship­shape soon

The Sunday Telegraph - Money & Business - - Front page - Lance Batchelor

En­cour­ag­ing hung-over 20-some­things to order twisted cheese dough balls or pep­per­oni pas­sion pizza to their homes on a Sun­day night was never some­thing for­mer Domino’s boss Lance Batchelor strug­gled with. Sell­ing £250-a-night cruise hol­i­days and in­sur­ance poli­cies to the over-50s is not quite so sim­ple.

“Domino’s, in a way, was do­ing too well. It’s a great busi­ness but it’s a sim­ple busi­ness – you make pizza, you open shops, you sell pizza,” says Batchelor, now four years into his role as the chief ex­ec­u­tive of Saga.

“I wanted the broader chal­lenge of fix­ing a great Bri­tish brand. I didn’t think it would take four years to get all of the pieces of the jig­saw sorted, but now we have done.”

A for­mer Navy sub­ma­rine of­fi­cer, the 54-year-old de­cided to take the leap from the UK’S largest pizza de­liv­ery com­pany just be­fore Saga’s dis­as­trous ini­tial pub­lic of­fer­ing in 2014. Its shares have fallen 28pc since then, with the com­pany is­su­ing a profit warn­ing in De­cem­ber and an­nounc­ing a man­age­ment shake-up in Jan­uary.

In­vestors have grown in­creas­ingly im­pa­tient with the speed of the group’s growth, and Batchelor has held meet­ings with over 35 share­hold­ers in the last few weeks to dis­cuss the com­pany’s fu­ture and re­vive spir­its.

“[In­vestors] want lots of in­for­ma­tion on in­sur­ance and travel and how the two in­ter­act, they want re­as­sur­ance that our debts are com­ing down, that our div­i­dend is strong, that the in­vest­ment we’re putting in will be spent wisely,” he says.

“We’ve had good noises back from the an­a­lysts and in­vestors, say­ing it’s be­com­ing clearer, they are start­ing to un­der­stand the mov­ing parts. Four years ago when we floated it was per­ceived we were a closed book.”

In­deed, one of the crit­i­cisms of Saga has been that it has pro­moted it­self as a hol­i­day com­pany when in re­al­ity around 80pc of its prof­its come from in­sur­ance. Batchelor ad­mits that in­vestors “con­sis­tently cry out for more and more in­for­ma­tion around in­sur­ance” but adds that the mar­ket­ing tac­tic is de­lib­er­ate. A pic­ture of a beau­ti­ful ship an­chored in St Lu­cia makes a won­der­ful visual when you are try­ing to sell mo­tor in­sur­ance, he says, and he has no in­ten­tion of split­ting the two sides up.

“There is a dilemma for us, which is we are two busi­nesses in one. The con­sumer thinks of us as a travel com­pany and the fi­nan­cial in­sti­tu­tions see us more as an in­sur­ance com­pany,” he says. “[But] if you go into a price com­par­i­son web­site and five brands pop up, the rea­son you know Saga is be­cause we’re a re­spected travel com­pany that might have taken your mum on hol­i­day. If you imag­ine them be­ing to­tally sep­a­rate then you just have an­other in­sur­ance com­pany that stands for noth­ing.”

In­vestors are start­ing to buy into his prom­ises. Though it has been a long time com­ing, debt has come down sig­nif­i­cantly and share­hold­ers can fi­nally see the po­ten­tial for growth.

There are hopes that Saga’s re­cently launched Vip-style mem­ber­ship scheme will in­crease en­gage­ment with the busi­ness, while the launch of two new cruise ships, as well as the grow­ing ap­petite among wealthy re­tirees to opt for long-haul, more ad­ven­tur­ous hol­i­days is ex­pected to boost its travel arm.

Ea­ger to tap into the rapidly grow­ing over-50s de­mo­graphic, in­vestors are hope­ful their pa­tience is about to pay off. Richard Mar­wood, a fund man­ager at the group’s fourth largest share­holder, Royal Lon­don As­set Man­age­ment, says Batchelor was “plain speak­ing” and clear about the group’s strat­egy when they met up.

“One thing that is quite re­fresh­ing is when they came to mar­ket they were very keen to make clear that they were not just an in­sur­ance com­pany. Now they’re ac­cept­ing that in­sur­ance is where they make a lot of the money,” he says. “It’s [also] worth not­ing that when they is­sued the profit warn­ing in De­cem­ber, they men­tioned the car in­sur­ance mar­ket be­ing quite tough and the sus­pi­cion was that maybe Saga had got some­thing wrong, but sub­se­quently we’ve heard from other play­ers that the mar­ket is tough. Peo­ple are now ac­cept­ing that.”

While its turn­around has been slower than ex­pected, there is no doubt that Saga is re­build­ing in­vestor con­fi­dence at a much faster rate than its for­mer sis­ter com­pany the AA.

The two firms were brought to­gether in 2007 un­der a hold­ing com­pany called Acro­mas, owned by pri­vate eq­uity groups CVC, Char­ter­house and Per­mira, but both be­came in­de­pen­dent after float­ing in 2014. In the years it owned the two groups, Acro­mas was crit­i­cised by union lead­ers for putting pres­sure on staff salaries and pen­sion ben­e­fits, while rack­ing up huge debts, and the AA, the road­side re­cov­ery busi­ness, is still strug­gling to re­duce its ex­pen­sive debt moun­tain. “I don’t want to fill in the gaps with the AA, I’ll let you do that, but we’ve had a good run since IPO,” Batchelor in­sists.

“The busi­nesses are fun­da­men­tally dif­fer­ent. The last ques­tion we had about the AA from an in­vestor was a year after the IPO.”

Does he think pri­vate eq­uity own­er­ship harmed the busi­ness? “I don’t think so, but the busi­ness was run for cash for 10 years – that’s what pri­vate eq­uity of­ten does, and now it’s be­ing run for long-term growth,” he says. “I think they [pri­vate eq­uity] got stuck, I think their plan was an IPO after five or six years and then the fi­nan­cial crash hit.”

Look­ing for­ward, Batchelor is philo­soph­i­cal about the role Saga has to play in so­ci­ety as Bri­tons live longer and the pop­u­la­tion gets older.

He speaks fondly of a re­cent trip to Nor­way where he joined Saga guests – mostly in their 80s and 90s – on a cruise where they saw a spec­tac­u­lar north­ern lights show in mi­nus 18C tem­per­a­tures. They were, he says, full of rich sto­ries and hav­ing the time of their lives.

“I was sit­ting next to a woman who was nearly 90 and she had been in the Wrens [the Women’s Royal Naval Ser­vice] at Bletch­ley Park in the Sec­ond World War, and she had some ex­tra­or­di­nary sto­ries to tell,” he re­calls. “Are we re­ally liv­ing our lives to the full, are we de­serv­ing of what she did and what her gen­er­a­tion did? I al­ways host a din­ner for our cus­tomers when I’m on board – ev­ery time I do that I wish I could be at a din­ner ev­ery night on both of our ships.”

That’s not to say they are easy to please. Hav­ing worked for Proc­ter & Gam­ble, Ama­zon, Tesco, Voda­fone and Domino’s, Batchelor ad­mits that the over-50s crowd are among his tough­est cus­tomers yet.

“By the time peo­ple join Saga they’ve al­ready tried stuff many, many times. They’re very de­mand­ing and they know what good ser­vice looks like – they def­i­nitely know what bad ser­vice looks like. They’re a re­ally tough au­di­ence,” he says.

“They have learnt through a life­time of ex­pe­ri­ence that if a credit card com­pany isn’t fair or a mo­tor in­surer isn’t right you just get up and go.”

De­spite the chal­lenges at Saga, of which there still are plenty, Batchelor in­sists he has never looked back at any of his for­mer roles with rose-tinted glasses. This in­cludes Ama­zon, where he was hired by chief ex­ec­u­tive Jeff Be­zos in the early days to launch a video unit for them, and where many of his friends are now in se­nior roles.

“Ama­zon was los­ing money at the time, and [Mr Be­zos] would stand up on a stage and talk about a fu­ture world where any­thing you wanted on­line, Ama­zon would of­fer it,” he says. “He’s done it. I’m not Jeff Be­zos, but I did take away from those years a sense that when­ever you run into a busi­ness chal­lenge, in­stead of just look­ing at the or­tho­doxy, the way it’s al­ways been done, you should look at it from a new an­gle.”

‘By the time peo­ple join Saga they’ve al­ready tried stuff many times. They know what good ser­vice looks like’

Lance Batchelor ad­mit­spro­vid­ing in­sur­ance poli­cies and hol­i­days to the over-50s is trick­ier than sell­ing piz­zas. Be­low, the Saga Sap­phire ar­rives in Dover

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