Simon Woodroffe: YO! Sushi and YOTEL
The YO! Sushi founder on keeping it small
Where to start with Simon Woodroffe OBE? Most of us are familiar with the YO! Sushi founder, such is his ability for using his own profile to publicise his ventures. In 2003 he sold his controlling interest in YO! Sushi in a £10m deal backed by Primary Capital, which has since invested significantly to expand the restaurant chain to more than 41 restaurants across six countries.
His big project right now is YOTEL, for which he and equal partner Gerard Greene secured £30m private investment from the Middle Eastern family behind IFA Hotels and Resorts, is still in its infancy, with hotels at Gatwick and Heathrow now open and with one in Amsterdam’s Schiphol airport set to follow soon.
International roll-out beckons. And to keep Woodroffe busy he’s getting closer to opening his health spa concept YO! Zone at Battersea Power Station in 2009
When did you realise the value of personal branding?
I opened YO! Sushi to survive, which is well known. We had a lot of attention when we opened. After a while there’s only so much you can say about the food and about the ambiance, so I started talking about what had happened to me – the world, and life and everything.
How did the transition occur?
When I started talking about what had happened in my life, that I’d always been in business, and didn’t have any qualifications, and I’d come into the restaurant business late in life and said ‘I just did it’ people were very interested. A lot of the story that built my personal brand was that I was an ordinary Joe – or Simon – who was pretty desperate in his life a couple of times, and really went for it. I never had a strategy to say ‘this is what you say, this is what you don’t say’.
What sets a business with personality apart?
You can’t invent a really great brand anymore in an advertising agency. You can tweak them when you’re Apple and have a big process needed to do it. Innocent Drinks didn’t become a brand because it said ‘we will sell more bottles if we write funny things on the bottles’. With very sophisticated consumers today for the most part we want to see something that’s authentic.
Entrepreneurs almost need a ‘back story’.
It’s de rigueur to have a story. But another way to look at it is that there’s always a story and now it’s ok to talk about it. Instead of being boardrooms, cufflinked and fat catted, it is for young people with dreams.
How have you used personal branding to your advantage?
The truth is, YO! is really quite a small company. We’ve got a chain of restaurants – if you count the overseas ones it must be going up towards 50 now – we’ve got two hotels operating, a lot of plans and some very substantial funding. All the rest of the things are in process. Yet we’ve built an image. You say Virgin and easyGroup and who else is there?
When has personal branding opened doors?
It’s the oil that makes it. I’ve always done lots of TV, always been a commentator, but it takes a series such as Dragons’ Den, to become really well-known. In the old days everyone steered clear of the TV for fear of being slated and today everyone wants to go on it. It’s useful at every single level. I’ve met people we’ve done things with and have employed through it. You phone people up and they’re interested in talking business. And people approach you with ideas. Every day something comes in. ‘Why don’t you have YO! this, YO! that, YO! Funerals?’.
The investments you made on Dragons’ Den, are you still involved in any?
I made more money than anyone else out of that first series and that was zero. I never ended up making an investment to tell you the truth.
Why didn’t it happen for you on Dragons’ Den?
The trouble with Dragons’ Den and one of the reasons I left, is that the BBC wanted to get crap people on so that I could kick the shit out of them, and I didn’t really want to do that. I think it’s always been about encouraging. I always thought we should get better people on and I actually think it would be a better programme long-term because you could then have seen more follow-ups.
What tips would you give for someone going on to pitch?
When people come to me and say they’re going on Dragons’ Den I always say to them ‘the thing to remember is that when you walk up the stairs and into the Den just remember it’s a TV show. It’s not five people thinking ‘how am I going to be able to make an investment here?’ they’re actually thinking ‘am I going to be the star of this next little piece?’.
Being a mentor
You seem to enjoy giving advice.
I’ve got the taste for being on stage and on TV. Ok the money’s good, but if you’ve learnt to be good at something you want to do it. I get to see a lot of different worlds and I’m very well connected because of it. I know the CEOs of most of the big organisations around the world. It’s a bit like being a high-class prostitute.
What single piece of advice would you give to other entrepreneurs?
Public speaking drives people into the business. I always think when I hear other people ‘I’ll nick that idea, I’ll have a bit of that’. Nothing’s new in this world. I haven’t invented any completely new thing. The sushi bars and hotels are an adaptation. I think we’re all plagiarists at some level.
Where does cracking America figure in your plans?
Hopefully YO! Sushi will go to New York in time. 10 years ago I think everyone would have said ‘stick to your home country, grow a business there, and then decide what to do after that’. Today, the world is so much more international. If you’re building a chain of restaurants or hotels you’ve got to think internationally immediately. Most people – even VCs – see that as a wise thing to do. Now that we’ve got low-cost business travel as well the whole thing makes sense.
Can YO! Sushi work in New York?
We’ve always known it would work in America. It’s amazing nobody’s ever done it. There’s nothing quite like what we’ve done.
Why didn’t you do it earlier?
Because there’s a million things to do. The thing that holds us back is our own capability, our own funding, our own staff. Running those organisations is complex. Just because something will work doesn’t mean you just open it. You’ve got to have the right people and the right structure. It’s complicated. You need good people to run them.
How do you go about finding the right people?
It’s that terrible word ‘network’. The more people you know, the more you talk to them, the more things happen.
The difficult ‘second album’
Moving on to YOTEL, how big a risk is it for you on a personal and financial level?
At the beginning it was extremely high risk. It was my money going into it.
How much did you put in?
Not a great deal. Less than £250,000 to do all the development work. But it was my money on the line and secondly it was my reputation. Everybody says ‘all this big talk about doing lots of things, so far he’s a one hit wonder and it’s taken him six years to get to being a one hit wonder’. So there was definite pressure.
What allayed that pressure?
I had a very good partner in Gerard Greene who runs the front-end of the whole thing. He wrote to me saying he wanted to be involved and he’s an equal partner now. He’s pushed the thing ahead.
What’s the next step for YOTEL?
Basically, we’ve proved a concept and now we’ve got to roll them out and make them into major things. We’re building SchipholAirport, Amsterdam at the moment. We’ll go into city centres and airports. Everybody’s interested. Landlords and airport sites, people all over the world are interested. We’ve got quite a big structure so there are going to be deals announced, for sure.
With YO! Sushi you spent quite a bit of time researching a similar concept that launched before you.
There was nobody who did it on the scale that we did it on. But, yes, I was always taking notes, taking the bank manager down there [to the rival business]. Working on weaknesses. Measuring. You learn it’s all in the detail – ATD, attention to detail.
So what have you done this time?
It took probably five years and Gerard probably four years developing it and thinking and thinking and thinking. You know the one thing everybody says when they go into that hotel is ‘it’s so obvious, why didn’t anybody do it before?’ and yet if I’d said to you ‘do you want to sleep in a seven square metre room with no natural light?’ you’d have just said ‘dream on’.
How could you know it would work then?
You can’t market research a market that doesn’t exist. It’s that awful expression of thinking out of the box. One of the great pieces of design I always thought was business class beds on British Airways. To sleep on the window side you actually have to step over a sleeping person, but people are actually quite willing to do that because you get a lovely bed. Most design houses or big companies would have ruled it out instantly.
Do you have a five, 10-year plan?
Yes we do, but we’re also opportunist in terms of the sites we’re looking at. We’re looking at everything. You can say you have a five or 10-year plan, but you’d be a fool to say that that’s what we’re going to do. Somebody said to me the other day, ‘if you want to make God laugh, show Him your business plan’. In the beginning there are so many opportunities that you don’t need to have a 10-year plan. Later, as you get more people involved and a bigger process you need to have a more structured plan.
What will constitute success for YOTEL?
Bottom line, a good return for our shareholders. But also I would say I want it to be recognised as the most innovative hotel chain there’s been in recent times, something that really changed things around and created a new niche in low-cost, high quality.
How big can YOTEL be?
I’d like it to be one of the 10 biggest hotel chains in the world inside this next 10 years. Basically, YOTEL can be enormous. A massive global brand. Much bigger than YO! Sushi.
In terms of your approach, how has it changed from Yo! Sushi to YOTEL?
It’s completely different. I did YO! Sushi hands-on and YOTEL I’ve done hands-off and Gerard runs all the day to day stuff of it. I guess I’m a mentor of sorts. We’re partners and talk about things. I’m still very involved in the design side. And I publicise it as well. Those are my roles really.
Do you find it hard to hand over control?
I find it very easy. I think it’s one of the things I’ve learnt to be good at. Let go and let others do it their way and not my way and share things out. It means I can build big companies without having to do everything myself.
Did you find that when Primary Capital bought YO! Sushi?
It was a really good experience for me. I’d always planned to sell and release capital for myself which meant I would be able to do new things. And I turned the strategy around. Instead of trying to control everything I try to take minority stakes, own licences in everything and build it from there working with other people.
That’s often hard for entrepreneurs to comprehend.
I’m not very good at sitting at the top of a pyramid and controlling everything and going into the office every day. Otherwise I wouldn’t be sitting here and would have a million secretaries coming in. I rather like my life the way it is and have got some nice partners and everyone plays their role out correctly and things work.
The art of innovation
What’s the process of innovation for you?
There’s two sides to it. One is research, research, research, but the other is don’t research at all. There’s a quantum opposite to everything. Most people sit there thinking ‘shall I, shan’t I?’. Ban yourself from doing that and get out there and find out. There’s no statues to committees. One person’s brain is the best person to develop, mature and grow an idea, then get something going. On Dragons’ Den the people you wanted to invest in have often gone out there and made sales to friends and family because they’ve actually made some sales.
What can you steal from other industries?
If you want to start something new go and look at the Apple store. Very good in terms of what they’ve done, completely revolutionised how you’d look at buying something. But there’s a vast amount space to revolutionise any business.
Take how you buy shoes. You walk into shoe shop and they have these rather naffly displayed shoes and then all the shoes are kept in boxes in the back and they have to go and get them. There must be a better way of doing that. I’d have all the boxes stacked on three sides of the walls up to the ceiling and then I’d have a robotic arm that goes up and pulls the box out and you’d see it coming down and would press the button and do it yourself. And it’s fun. You could take any business in the world and see a way of completely changing it around.
With YOTEL was there anything you did?
I travel a lot, see different things. For YO! Zone I’ve been all around the world looking at spas. And then I get a piece of paper out, try and soak it all in, write up some notes, I draw and sketch a lot, take photographs, mount them all up and then try to get people involved and see their reaction. I just talk about it a lot. When I was a kid at school I used to think that if you told people about your ideas they’d never happen. As an adult now I know that the people who actually get things done are the ones who talk about them constantly. I thought people would nick your ideas, but they don’t, they’re actually too busy trying to do their own thing.
Dealing with investors
What’s your projections formula when securing finance?
All projections are is things you’ve made up. You make up what you think will happen as thoroughly as you can. But every investor knows that all they are is figures that people have made up based on what they think they’re going to do.
What kind of finance have you secured to fund YOTEL?
Private money from a Kuwaiti investment company called IFA Hotels and Resorts. The £30m was well publicised and we’ll go into new funding rounds as they come. They’re a very ambitious company and want to move as fast as we do.
Why did you opt for private investors from Kuwait?
The Middle East are very good investors, far better than having a venture capitalists I would say. They take a long-term view of it, they’re very involved in the brand, they like it and they do things because they want to do them. Obviously it’s all fiscally based. With a lot of venture capitalists it is purely a numbers game.
There’s more resource if they need it.
The younger generation have a lot of pressure on them because they want to be as good as their dads and they want to make financial returns and be successful. In the Middle East they’re always going to be in a position to go on their holidays. Taking a longer-term view means it’s not just three to five years, they might just keep something because they like that brand.
How does the relationship work in terms of equity?
Ours are very good. Generally Middle Eastern investors like as much control as they can possibly get and they run their businesses slightly differently to the way we do over here. I’ve got good investors and they can see that motivating people within the company makes sense. But they’re all ratchets; the better you do the more you make.
How much of a stake do you have in YOTEL?
I have a minority stake, as does Gerard. And if we do very well we will get into a certainly equal, if not majority position. So it’s a ratchet. I’m not going to tell you what the numbers are. And of course I’ve got a royalty on all the businesses.
How does that work exactly?
I just take a licence. Whatever the turnover is every year I get a percentage of it. That’s what I based the thing on from day one with all the businesses. It’s double-dipping it. If we ever sell YO! Sushi I’ll never have to write a book like Richard Branson about How I Lost My Virginity – I Lost My YO! because I’ll still be earning from it.
The Woodroffe rules
What are your key business metrics?
That’s not me. For me there’s a simple formula. Obviously it has to be profitable. There are people that work that out very well. For me, it has to fit the brand. Ours is innovative. I don’t want to do anything unless people say: ‘It’s YO! so it must have turned things on its head.’ Like I say, the hotels, Heathrow does over 200% occupancy and every hotel chain in the world is trying to do 100% occupancy. It’s that kind of thing that turns me on.
Differentiation with mass appeal.
Like a lot of entrepreneurs I’ve never really done it for the money. It’s nice to have the money and it’s what makes everything work, but I like to have an idea and see it work. Tim Smit of the Eden Project said to me: ‘We’re fucking mad. If we just went and did what all the other businesses do, buy companies and turn them around we’d make a lot more money, but we’re obsessed with having ideas and seeing them happen.’ It’s what gets me out of bed.
With the diversification model are there any rules you apply?
If you go and talk to Virgin’s people, they’ve got a lot of rules and systems for this. We’re not that far on. It’s more the Richard Branson ‘screw it let’s do it’ basis. The thing I learnt from him and Stelios is that they do far far too many things. That’s why I always say I only want to do five things. Do five things really well. Keep it small. Don’t get into the financial sector. Don’t get into telephones. I’m sure we may do those in time, but for the time being just keep it to what you want to do. In time, beyond my tenure it will go into other things.
So where are you now?
I’ve got two businesses, YO! Sushi and YOTEL. YO! Zone is something we’re developing with the owners of Battersea Power Station. YO! Home is in the early stages of development. RadiYO! is broadcast stuff I did. YO! How is all the publishing and my public speaking business.
Do you consider any of them indulgences?
They’re all indulgences and they’re all not. Everything’s got to make money. I wouldn’t say we’ve made any money out of RadiYO! But it’s such a good word it’s good publicity.
When will YO! Home launch?
When it’s ready.
Have you got partners or backers?
It’s all my own money at the moment.
How much are you investing?
I’d imagine I’ll probably invest about £1m by the time we’re done in the early development of it. From there all the funding, because it’s much much bigger money, will come from others. My general principle is to invest between £250,000 and £1m in projects, get them up and running to the point that they need proper financing, and then recoup and go into a minority stake when somebody puts up all the main money. That’s my principle. At the moment we’re building prototypes, it’s getting to the point where people believe it. I’ve always believed in taking a long time to do things, because if you take a long time to do them you’ve got a much better chance of it being right.