getting the strategy right
planning august 2007 — qbr 17
regulation, taxation & risk management
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
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
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
wholesalers and setting
up shop in the Brisbane
2006 Queensland 400
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.
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
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
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
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.”■
• 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)