King Solomon's food empire

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                                                                                                                                                                                                                                                              Organise your council today
King Solomon’s food empire
avraam solomon is Queensland’s new seafood king, as his Q400 distribution business aggressively
                                                                                                                                                                                                                                                              the three most important pages ever written for business leaders are
                                                                                                                                                                                                                                                              pages 114-116 in Jim Collins’ Good to Great. Verne Harnish writes
diversifies across the food supply chain. Jason Whittaker reports                                                                                                                                                                                             It was key to putting $160 million in Richard Kay’s
                                                                                                                                                                                                                                                              pocket; it’s been critical in helping Brian Scudamore


M
           ost businesses map out future plans on paper.                                                                            The company now has four key depots in Queensland                                                                         manage the growth of one of North America’s top
           Avraam Solomon took to the dinner plate.                                                                              — Brisbane (an impressive temperature controlled                                                                             franchises; and it both underpinned one of the most
              “I had a philosophy around the plate and                                                                           warehouse and distribution hub at Murarrie), the Gold                                                                        successful college football seasons for a rookie coach
what food is really on the plate,” says the CEO of                                                                               Coast, Sunshine Coast and Townsville — and, according                                                                        in 2006 and drove the success of the wealthiest
Solomon Food Group, a diversified and burgeoning                                                                                 to Solomon, excellent relationships with the large                                                                           entrepreneur of all time.
food services and food distribution business based in                                                                            manufacturers.                                                                                                                  What Collins outlines on these three pages are the
Brisbane.                                                                                                                            “That helps,” he says of the customer relationships.                                                                     11 characteristics of what he calls “the Council.”
  Solomon, who used to deliver milk from the back                                                                                “They know where we’re heading and what we’re                 markets at Rocklea. Twenty vehicles now supply fresh
                                                                                                                                                                                                                                                                 Unlike the standard weekly management meeting,
of his father’s truck, is now delivering a range of                                                                              doing.”                                                       and processed product from the Tweed to the Sunshine
                                                                                                                                                                                                                                                              this additional meeting is aimed solely at giving
food products to some of the biggest caterers and                                                                                   The advantage Solomon has over his more corporate          Coast every day (the group has 83 trucks in total, all
                                                                                                                                                                                                                                                              council to the CEO. It’s not about consensus building;
food companies in the country, while more recently                                                                               rivals is the family nature of the business. Small            running local delivery work).
                                                                                                                                                                                                                                                              it’s about generating “talk time” in an era when
diversifying into and capturing supply chains in the                                                                             distributors, often with succession issues, looking to sell      “We had to be in the Brisbane markets,” Solomon
                                                                                                                                                                                                                                                              executives have been driven to silence by technology
seafood and produce sectors.                                                                                                     up welcome the personalised approach.                         says. “There was no way we were going to warehouse
                                                                                                                                                                                                                                                              and left to solve problems via email.
  “We had this philosophy where we supplied everything                                                                              “Although we have a corporate structure we’re still        this product outside the Brisbane markets. We had an
                                                                                                                                                                                                                                                                 It’s about helping executive teams discover and face
that goes around the plate and we’re missing what’s in                                                                           seen as a family business,” he says, “which I think makes     understanding of how these businesses trade.”
                                                                                                                                                                                                                                                              “the brutal facts” as Jim Collins so aptly describes in
the middle,” the youthful 34-year-old says of the group’s                                                                        us different to our corporate competitors. But they know         It is that research and market intelligence Solomon
                                                                                                                                                                                                                                                              Good to Great.
new direction.                                                                                                                   we’ve got the size and the buying power to look after         credits for the company’s rapid success in the fresh
  “If we’re going to go there for the sauces on the side                                                                         them.”                                                        sector. “We call ourselves produce specialists because we
and chips, we’ve got to look at where the better value is                                                                                                                                                                                                       Structuring Success
                                                                                                                                                                                               feel we’ve really come into that market over the last two
on the plate. And it was always the centre of the plate.                                                                                                                                                                                                        “Players that shoot foul shots the same each time,
                                                                                                                                 Seafood supremacy                                             and a half years and understood it,” he says.
  “So a box of meat costs $100 and a box of chips costs                                                                                                                                                                                                       make a lot of shots,” notes Richard Kay, co-owner
                                                                                                                                    Solomon has quickly become Queensland’s new                   “We actually work with our customers to do all the                                                                    have a set of Norms that we follow to make the
$15. I’ve still got to put it in a warehouse, I’ve still got to                                                                                                                                                                                               of the NBA Washington Wizards and founder of
                                                                                                                                 seafood king. The company has acquired a number of            value-added stuff. It’s not just product, it’s how they                                                                  meeting as productive, focused and respectfully
do all that.”                                                        The broadline food services business — supplying                                                                                                                                         OTG Software. “The same in business. I felt my most
                                                                                                                                 key wholesalers and involved itself in the sourcing,          want the product. We’re looking at ways of doing that                                                                    contentious.”
  Solomon has quickly claimed ownership of the plate,             everything from fresh produce to ready-made meals to                                                                                                                                        important job was creating a consistent structure for
                                                                                                                                 processing and distribution of product.                       and if it means building different processing facilities                                                                    “The cool part about this STORM meeting is that we
and wants a bigger share of the group’s key markets.              caterers, restaurants and airlines like Qantas — sits in                                                                                                                                    being successful.”
                                                                                                                                    In March, Solomon purchased Gambaro’s, a large             then we’ve done that.”                                                                                                   never get into any other issues. It’s always strategic.
Aggressive growth through acquisitions (and private               a market worth about $8 billion annually, according to                                                                                                                                        And successful they were. Launched in 1992,
                                                                                                                                 Pinkenba-based seafood wholesaler, and has continued             Solomon is also looking further down the supply chain                                                                 If we have more tactical or urgent issues to discuss
equity backing) has seen the company compete with the             Solomon, and growing at up to 13 percent.                                                                                                                                                   Kay’s data management software firm grew to 450
                                                                                                                                 to grow its seafood network through more acquisitions,        at investing in farms to improve quality control and                                                                     they are always held at other times,” concludes
corporate titans in food distribution while maintaining its          “We’re only a very small part of the market but what it                                                                                                                                  employees with 12,000 customers. Going public
                                                                                                                                 including Cairns-based Pantacchini’s Seafood                  better serve customer demands.                                                                                           Scudamore.
family company roots.                                                                                                                                                                                                                                         in 2000, OTG was acquired by Legato in 2002
                                                                  tells you is there’s still plenty of room to grow,” he says.   Wholesaler in July.                                              “We don’t think we’ll end up buying farms, it’s a real                                                                   What Scudamore and his team understand is that
  Solomon Food Group placed 90th in the 2006 Q400,                                                                                                                                                                                                            for $403 million, of which Kay owned 40 percent.
                                                                     That growth is driven by consolidating smaller players,        “We would be the State’s number one wholesaler in          family, cultural thing and I think you have to be on the                                                                 if you want to move faster you have to pulse faster.
with an ever-expanding staff roster of 340, more than                                                                                                                                                                                                         Legato was then acquired by EMC for $1.3 billion
                                                                  something the group and its chief rivals, Bidvest and          seafood,” Solomon says. “We nearly have a $70 million         farm to run the farm,” he says.                                                                                          Whereas most teams moving as fast as Scudamore’s
6,000 customers and turnover in the hundreds of millions                                                                                                                                                                                                      while Kay was on the board of directors.
                                                                  PFD Food Services, are moving fast on. Solomon says in         business just in seafood trading.”                                                                                                                                                     would exclaim there is no way they can take this much
of dollars.                                                                                                                                                                                                                                                     Underpinning this success was a simple meeting
  There are also plans to move beyond the company’s               the food services game volume speaks, well, volumes.              The consolidation of those businesses continues, with       “We nearly have a $70 million                                 and accountability process that started with a 7am
                                                                                                                                                                                                                                                                                                                        time each week to meet, Scudamore knows that the
                                                                                                                                                                                                                                                                                                                        strategic issues must stay top of mind.
                                                                                                                                 the company set to launch a new brand to integrate all of
Queensland heartland and grow across the Tweed.
“We’re very happy with how we’ve structured the
                                                                     “The more you can trade with your suppliers and
                                                                  partner with them the better terms you get and the better      its seafood trading.                                          business just in seafood trading.”                             breakfast every Monday morning. From the day Kay
                                                                                                                                                                                                                                                              started OTG until the day it sold, he and his executive
                                                                                                                                    “For Queensland now I think it’s all about a bit of                                                                                                                                    A Long Walk
Queensland business and we think that model can work              it is for your business,” he explains.                                                                                                                                                      team stuck to this routine.
                                                                                                                                 organic growth and driving it forward,” he says, sighting       “But what we might do for example is invest a million                                                                     It was a weekly walk that was behind the successful
in another state,” Solomon says.                                     “It’s [the food services market] predominantly made                                                                                                                                        “The reason we met so early on Monday was
                                                                                                                                 the opportunity to leverage                                   dollars on a farm somewhere and say ‘we’ll build a                                                                       first season for Bret Bielema, coach of the Capitol One
                                                                  up of independents, guys running around operating four                                                                                                                                      we knew we were up against a lot of smart, well
                                                                                                                                                                                                                                                                                                                        Bowl Champion Wisconsin Badgers college football
“While we’re hitting our numbers                                  or five trucks. What we saw the opportunity to do is
                                                                                                                                 the food services business
                                                                                                                                 off the large seafood
                                                                                                                                                                                               packing shed’. So we’ll have a state-of-the-art packing
                                                                                                                                                                                               shed for you, we’re going to buy all of your product
                                                                                                                                                                                                                                                              prepared competitors,” recalls Kay. “This early start
                                                                                                                                                                                                                                                                                                                        team. Following in the footsteps of the legendary
and the opportunities are there to                                really go and consolidate all of that.
                                                                     “We like the fact the business can grow and keep
                                                                                                                                 customer base.
                                                                                                                                    The group has also made
                                                                                                                                                                   90                          … we’ll put a bit of money into housing it and make
                                                                                                                                                                                               sure it’s at a certain level and really bypass a lot of that
                                                                                                                                                                                                                                                              to the week motivated us to prepare and helped us
                                                                                                                                                                                                                                                              generate excitement as the company grew. And
                                                                                                                                                                                                                                                                                                                        Barry Alvarez, who took the Badgers to eight bowl
                                                                                                                                                                                                                                                                                                                        wins in 16 seasons, all eyes were on Bielema, the
                                                                                                                                                                                                                                                              some of the best conversations occurred on the walks
buy and I can keep structuring it                                 growing. It’s not like there are 20 targets and we’ve got      significant acquisitions                                      market section.
                                                                                                                                                                                                 “We are definitely getting enough volume to do that
                                                                                                                                                                                                                                                              over and back from these meetings.”
                                                                                                                                                                                                                                                                                                                        second youngest coach in US college football.
                                                                                                                                                                                                                                                                                                                           Although Alvarez and Bielema talked frequently,
                                                                  to go and buy 18 of them and the price is going to go up
right so we can handle it, there’ll                               and up. There’s literally 1,200 targets and we only need
                                                                                                                                 in the produce area,
                                                                                                                                 consolidating two local
                                                                                                                                                                    Solomon Food Group
                                                                                                                                                                    Ranked 90 in the
                                                                                                                                                                                               and we can specifically ask how we want to grow the
                                                                                                                                                                                                                                                                Following Kay’s “council” breakfast were a standard
                                                                                                                                                                                                                                                              set of management, sales and marketing, software
                                                                                                                                                                                                                                                                                                                        every Thursday Alvarez and Bielema took a scheduled
      be no slowing down.”                                        to buy 40 or 50 of them and we’re going to have a pretty
                                                                  sizeable business.”
                                                                                                                                 wholesalers and setting
                                                                                                                                 up shop in the Brisbane
                                                                                                                                                                    2006 Queensland 400
                                                                                                                                                                                               product.”
                                                                                                                                                                                                 Drought makes it a “tough game”, Solomon admits,
                                                                                                                                                                                                                                                              development, and finance/accounting meetings that
                                                                                                                                                                                                                                                                                                                        hour and half walk.
                                                                                                                                                                                                                                                                                                                           And when Alvarez asked if it was OK if he missed
                                                                                                                                                                                                                                                              often took the executive team (and department heads
                                                                                                                                                                                               but the company has relationships with farms across the                                                                  the Capitol One Bowl game, since he was doing
                                                                                                                                                                                                                                                              as they grew) through to lunch.
                                                                                                                                                                                               country to ensure constant and quality supply.                                                                           colour commentary for the Fiesta Bowl on the same
                                                                                                                                                                                                                                                                The key is that they had this additional breakfast
                                                                                                                                                                                                 The next frontier: meat. While the business is largely                                                                 day, Bielema responded affirmatively, so long as they
                                                                                                                                                                                               vegan, that will quickly change.                               meeting that was more open ended, giving the top
                                                                                                                                                                                                                                                                                                                        still did their Thursday walk — which was scheduled
                                                                                                                                                                                                 Solomon says the company is close to a “significant          team a chance to talk through the challenges facing
                                                                                                                                                                                                                                                                                                                        on a Saturday to keep it two days before the game
                                                                                                                                                                                               acquisition” of a “market leader” south of the border.         the company every week before addressing the
                                                                                                                                                                                                                                                                                                                        like in the regular season. Now that’s sticking to a
                                                                                                                                                                                                 “We’re going to get that product and that brand and          tactical issues in the follow-on meetings.
                                                                                                                                                                                                                                                                                                                        routine!
                                                                                                                                                                                               we’re going to bring it to Queensland,” he says.                                                                            I hope the pattern of success is apparent. Like John
                                                                                                                                                                                                 “What we’re going to do is put it [meat] throughout            The STORM
                                                                                                                                                                                                                                                                                                                        D. Rockefeller’s daily luncheon with his directors,
                                                                                                                                                                                               our eight depots and go to our customers with a                  1-800-GOT-Junk? is one of the fastest growing
                                                                                                                                                                                                                                                                                                                        getting regularly scheduled talk time is crucial to the
                                                                                                                                                                                               professional, right product the first time; we’ll put          franchises in North America, adding 110 of their
                                                                                                                                                                                                                                                                                                                        success of your company. Locate your copy of Good
                                                                                                                                                                                               professional marketing people and sales people in just to      315 franchisees in 2006 alone. Key to driving and
                                                                                                                                                                                                                                                                                                                        to Great and get The Council in place.■
                                                                                                                                                                                               push our meat through our business.                            managing this growth is a weekly 3.5 hour STORM
                                                                                                                                                                                                 “We’re very excited about the sales we can generate on       (STrategic Operational Review Meeting) attended by
                                                                                                                                                                                               the back of this business.”                                    a nine-member Leadership Team.
                                                                                                                                                                                                 Two sons of the family owners will remain with the             “We meet to engage in dialogue and debate                         Harnish,
                                                                                                                                                                                               business. Solomon believes passionately in retaining           focused on our Strategic Plan,” explains founder and                Verne, is the
                                                                                                                                                                                                                                                                                                                                                      ‘growth guru’
                                                                                                                                                                                               expertise within acquired businesses.                          CEO Brian Scudamore. “We’ll discuss and debate                      entrepreneurs arou                     for
                                                                                                                                                                                                                                                                                                                                                        nd the world. He wi
                                                                                                                                                                                                 “There’s no use buying them out and getting rid of           opportunities six months to three years out, a lifetime             be speaking at this                       ll
                                                                                                                                                                                                                                                                                                                                                      year’s Q400 Busines
                                                                                                                                                                                                                                                                                                                                 Summit on August                          s
                                                                                                                                                                                               them,” he says. “We’re not meat specialists yet, they are,     when your business is growing rapidly. We really try               Conservatorium, an
                                                                                                                                                                                                                                                                                                                                                     23 at the Queenslan
                                                                                                                                                                                                                                                                                                                                                                          d
                                                                                                                                                                                                                                                                                                                                                        d
                                                                                                                                                                                               so they need to stay there and make it all happen.”            not to argue to be right but debate to really ensure we            country in Octobe will be touring the
                                                                                                                                                                                                                                                              all get our fears and worries out on the table.”                                       r.
                                                                                                                                                                                                 Solomon freely admits he’s lurking businesses that
                                                                                                                                                                                               may have succession issues. But often those business are         “Sometimes the discussions just continue to further
                                                                                                                                                                                               willing prey, and happy to sell out to a private company.      align us in our goals and strategic opportunities. We
18     qbr — august 2007                                     planning




  To Solomon, the story is familiar: “Those independents
are all in their 50s and 60s, most of them. They all came
out from overseas, most of them, they bought a truck,
they started trading, and they’ve built their businesses
over 20 or 25 years into a great business turning over
somewhere between $5-15 million.
  “[They] looked after the family, but looked after the
family too well because all their children went and
studied and none of those children want to own a truck
and sell fish and chips. “There is no succession planning
in a lot of those cases.” Solomon can sympathise with
their plight. “I don’t muck them about,” he says.
  “I’ve been in their positions, I’ve had a business like
them before, years ago we’ve all been through tough
times and wanted to get out or not get out, I know what it
feels like, so I tell them straight up.”
  But that doesn’t mean he will look at failing
businesses. “I just know it will bog down my people too
much and I just won’t let that happen,” he says.
  “We need bolt-on businesses that can contribute back
to the corporate office so the whole model can just keep
rolling out.”

Bedding down growth
   Despite the regular acquisition activity, the group has
implemented a “consolidation plan” for Queensland over
the next 12 to 18 months.
   “We really want to mop up whatever we can in
Queensland,” Solomon says. But Solomon’s eyes are
never closed to new opportunities. The industry waits
for nobody, he says. “You can’t say no now and then in
two years expect the business to still be there because
the industry is rationalising, it’s not just Solomon Food
Group,” he says.
   Currently worth about $180 million, Solomon has set
a $300 million budget for the company in 2009 and has
a half-billion dollar goal within two years. That target
is driven by a mixture of debt and equity. Private equity
firm Advent Private Capital invested in August last year
and, according to Solomon, has been “absolutely rapt”
with the growth spurt.
   “I’m proud of it,” Solomon says. “Actually delivering
the acquisitions and bedding them in and making them
settle and doing all of that isn’t that easy sometimes.”■




solomon’s story
   • Established: late 1970s
   • Managing Director: Avraam Solomon
   • Turnover: $180 million
   • Staff: 340
   • Customers: 6,000+
   • Headquarters: Waterfront Place ,Brisbane
     Product Lines: 5,000 (food service); 600
     (seafood); 400+ (produce)