Peter Castle was never looking to own a restaurant empire. But then neither was Francesco Zanasi. Which makes the story of how the two entrepreneurs got together to form Primi Piatti (today a 30 store empire) an interesting one. Castle, a quantity surveyor by training, came to the food industry quite by accident. “I was busy building a small retail centre in Tyger Valley and Spur Steak Ranches were going to put a Panarotti’s and a Hard Rock Café franchise in it. But when it came to it, things didn’t work out with the two prospective franchisees they’d been talking to. So there I was with a building that had been purpose-built for these two restaurants, and no tenants. I decided the only way to make sense of the development was to become a franchisee myself,” he relates. In his extremely limited spare time, Castle did the Spur training course during the evenings. “Here I was – 35 years old and this was not what I had planned to be doing. I was trying to run a full-time development business during the day and do this course at night, but I went through with it,” he says.
The restaurants opened their doors in 1990 but, as Castle relates, neither of them worked. “I always say I got together with Francesco because of my business failures – and those were two of them. But I guess I didn’t learn my lesson because I continued in the restaurant trade, opening a Spur in the Waterfront.” He secured a lease at the Waterfront extension and a franchise agreement with Spur for a Hard Rock Café. “And then one of the best deals of my life landed in my lap. The Americans who own the Hard Rock Café brand in the US wanted the Waterfront store and they paid me $2 million to hand back the franchise agreement and cede the lease to them,” he recalls. If Castle thought his restaurant fortunes had changed, he was about to be proved wrong. Cash-flush and with his Waterfront Spur doing well, he sunk his capital into a Waterfront version of London’s prestigious Sloane Street Joseph Ltd clothing store and affiliated Joe’s Café. “We took a bath!” he laughs, “Neither the clothing store nor the restaurant worked. My partners and I lost about R5,5 million in that store over three years.”
You’d think that by this stage, a man who’d never wanted to be in restaurants in the first place would have been put off them for life. But, asked why he didn’t throw in his apron, Castle is characteristically philosophical, “I knew the industry backwards by then – I certainly knew how to lose money in it! And remember that I came from the property development industry where no one ever wants to pay you and if the market turns bad, you just sit. The restaurant trade is a cash business where you don’t have to carry debtors. Even with failed restaurants, I was always attracted by the positive cash flow.” One day as Castle was pondering the sad state of his fortunes, the idea for Primi was born. “I was eating lunch in a place called Nino in Greenmarket Square. It was run by this maverick old Italian guy called Nino Zanasi and his two sons, Christian and Francesco and let me tell you, this place was the buzz.
It was an institution in Cape Town – if you wanted good food, that’s where you went. It was the kind of place where people didn’t mind queueing. The energy and the vibe were intoxicating – it was a unique dining experience,” he recalls. “At Primi we have a concept called Urban Energy and that describes exactly what these guys were about – from father and sons to the waiters, everyone was passionate about that restaurant.” Castle’s idea was for the Zanasis to help him create a new restaurant on the site of his failed Joe’s Café Waterfront shop. But the Zanasis had other ideas. “I approached Francesco and he just batted me for a six,” he laughs. “Old man Nino ran the floor with Francesco in the kitchen and Christian at the bar – they had a thriving family business over which they had total control. Why fix something that’s not broken, right? So they had no intention of helping me to open a restaurant,” he explains.
Castle was nothing if not persistent, however, and for a year tried to convince Francesco to join him. “During that year, they were approached by investors to open a Nino in Kuwait City which Francesco managed there for six months, and they took over a restaurant in Camp’s Bay.” With those forays into ‘expansion’ Francesco finally agreed to Castle’s offer. “I told them to come and look at the business and that I’d change anything they wanted and they could have 50% of the profits,” he says.
So Primi Piatti opened its doors in the Waterfront in August 1999 and made a fortune. “Joe’s Café never did more than R200 000 a month. In the first ten days that our new restaurant was open, we did R250 000, and R800 000 in the first month,” says Castle. The reason for the success? “The Zanasi family following. Simple,” he answers. “The buzz in Cape Town was that the Zanasis had opened in the Waterfront.” In fact, for the first six months, the public referred to Primi as Nino at the Waterfront. “It was a year before I heard the name Primi being used,” he says.
With the success of the Waterfront store, Castle set his sites on expansion. “I just knew we were onto something big.” But, as anyone who has tried to set up a restaurant franchise and failed will tell you, running a tightly-controlled family operation is very different from running an extended restaurant empire. The essence of the Zanasis’ success lay in their personal and passionate attention to service and the quality of the food, and Castle was warned by colleagues in the restaurant trade to leave well alone and not try to replicate the success of the Waterfront Primi store. “They said it couldn’t be done,” he says. And yet, that’s precisely what Castle and Zanasi have managed to achieve. How? Castle explains: “I remember in the early days when we spoke about expanding, Nino always used to say to me: ‘Yes Peter, but what about the food?’ and it’s something I’ve never forgotten. Never forget the quality – the food has to be outstanding. That’s a given and it’s something we’ve never deviated from.”
But there was something else as well. “At the end of the day, you can probably make a Napolitano sauce as well as we can, so it can’t only be about the food. Back in the days of the Greenmarket Square store, the thing that the Zanasis had that attracted people was passion. Passion that led to a level of customer-centricity that had people lining up outside. And that’s what we needed to capture and keep,” he says. Today, if you walk into any Primi Piatti, one of the first things you’ll notice is the iconic orange overalls worn by the waiters with the words “Work is Love made Visible” emblazoned on the back. It’s a principle Castle says is absolutely central to the company’s success. But passion, unlike Napolitano sauce, is not easy to bottle. Castle and Zanasi know this better than anyone. “The biggest challenge, back then and still today, is the human one. To find passionate people, train them properly and keep them motivated,” says Castle. And motivation, he says, comes not purely from money, but from the ability to grow and develop. So Primi has focused on two things – stringent, comprehensive, fanatical training and developing people from the inside.
“In the early days we had a training barracks. Anyone who wanted to work at Primi Piatti, from a waiter or chef to a franchisee, had to go and live there while undergoing training. The only separation was between men and women so you literally lived with the people you were going to work with. It was like an army camp – in fact, that’s where the chevrons on the waiter’s overalls come from – it was like a ranking system,” Castle explains. The barracks itself may be a thing of the past but the training programme is no less rigorous; it takes between six to 12 months to train operators and staff before opening a new Primi store. “To operate and run a restaurant successfully you need to have empathy. And empathy only comes from knowing how to do everything that everyone else in the restaurant has to do. So our operators have to be the best at everything – the best waiter, the best griller, the best barman,” explains Castle.
Finding the right operators is an ongoing challenge, as Castle explains, “We need people who are aligned with our belief system but once a restaurant brand is perceived to be successful, you get inundated by people with money who want to invest in it. In this industry there is no easy way to make money – there are no short cuts. You can’t sit on the sidelines and expect to be successful. The operational intensity is very high and you can’t just have managers and investors – you have to have owner-operators.” Finding people with the right mix is a tough job, which is perhaps why Primi has focused so much on internal development. “We don’t actually care what skills or experience people have. What we’re looking for is passion – for people and food and the Primi way of doing things. You can train people to do tasks but you can’t train them to be passionate. So taking people from the inside who have the right attitude and giving them the potential to grow and develop and improve has really worked well for us. We have people here who started in the scullery and are now general managers of stores.”
But while he concedes that it’s not the easiest or fastest approach, it’s certainly the most effective. This is why development is so close to the heart of the company. “Sixty percent of our stores are operated by people from historically disadvantaged backgrounds – but this hasn’t really been by design. It’s because we’ve taken people from the inside and given them opportunities.” A search for new opportunities is what compelled the birth of Primi and it’s what continues to drive the growth of the brand. The company has diversified into hotels and currently owns and operates three. “Hotels are something I’ve been involved in over the years and it made sense to link the two in the way we have. We cross sell between the hotels and the restaurants,” says Castle.
Other exciting developments in the pipeline include the launch of Primi Caffé and Primi Espress, which will diversify the business into the European coffee bar and fast-food take-out markets. All existing Primi restaurants serve take-aways but the company wanted to have a specifically-focused outlet to avoid having to ‘serve two masters’ in the restaurant. Primi Espress stores will be suited to residential nodes, food courts, high streets and the like, with a lower capital outlay and a higher return on equity. “Everything we do is about redefining the restaurant experience and we want to continue to push boundaries.” The company recently won the international MAPIC Award for Retail Regeneration for its sustainability-driven store at the Lifestyle Garden Centre in Randburg as well as the Spectrum Award – Celebration of Retail Excellence from the South African Council of Shopping Centres. Castle concludes, “You need to continually be innovating and looking to the future. This means pulling through young blood in the company that will infuse new energy into the brand.”
Finding the right franchisees
Finding the right franchisees is a challenge with which Primi’s franchise director, Hitesh Patel, is intimately familiar. He explains: “Screening franchisees is probably the single most important thing to do at the outset. That rests with the directors of Primi. The prospective franchisee meets with Peter and me initially and then gets to meet with Francesco and Gavin Burnard, our operations directors. We make every effort to be upfront and realistic about owning a Primi. We do not create a false illusion. Key to franchising is what is known as the disclosure document, where you disclose every single piece of information that would be relevant to a prospective franchisee. We also insist that they spend time in the restaurant with Gavin or Francesco in order to experience it first hand. We do not make use of psychometric tests as we find that they are too subjective. If after all of this, the franchisee wants to proceed, we begin the training process and site selection suitable to the specific franchisee.”
There are a range of mistakes to avoid. Of these, he lists the following as the most common:
1. Insufficient support from the franchisor with regard to training, regular menu updates, area management support, brand awareness, point of sale database support, purchasing power and negotiating with suppliers
2. The concept that is being franchised has to have critical mass, be unique and identifiable and must have good food first and foremost, which often is not the case.
3. Many restaurants try to grow their brand by opening stores too quickly, without bedding down the foundation and getting it right first;
4. The franchisor gets franchisees to sign rental deals that are onerous and unaffordable, placing undue pressure on the franchisee;
5. Businesses are over-capitalised, again placing undue pressure on the franchisee and ultimately the brand.
Adapting models for greater efficiency
Franchising and growth bring other challenges as well, as Primi’s franchise director Hitesh Patel explains: “A challenge that we continually face is the signing of good rental deals with landlords. Interest rates have risen, building costs are higher than ever before and land is at a premium, which ultimately results in excessive rentals being charged. This places a burden on the franchisee’s business, particularly at the outset when they are redeeming high debt. Coupled with this are the excessive labour costs associated with running a restaurant. In order to address these problems, we have opted for smaller premises, more efficient kitchens, multi skilled staff and an intensive training programme. It makes more sense to turn tables faster than to have half the restaurant empty for most of the day. We have also been successful in negotiating with the IDC and various banks good finance packages that ease the pressure on the franchisee at the outset.”