Developing businesses using private equity - Chris Ormrod from Cakesmiths

What does Richard Branson, Andy Serkis and Pamela Anderson all have in common? It’s our latest podcast guest Chris Ormrod from Cakesmiths who joins us for a chat. 

Having worked at big brands such as Virgin, Mars and Haagan Dazs, Chris Ormrod now describes himself as a property developer for businesses. Using private equity, he finds businesses in need of a renewed purpose and spends time getting it back onto its feet - at which point it usually becomes attractive to a potential acquirer.

Transcript

Mark Greaves:

Today I'm delighted to be joined by Chris Ormrod, a serial food entrepreneur who is currently CEO at Cakesmiths. I'm Mark Greaves from PKF Francis Clark, and I'll be your host. Don't forget to subscribe to this podcast to get updates and notifications on when our latest episodes are available. 

Hi Chris, how are you today?

Chris Ormrod:

I'm good, the sun is shining, the cakes are coming out of the ovens and the coffee's warm. It couldn't be nicer, actually,

Mark Greaves:

I will share with our audience that we were chatting beforehand and you've got a picture of a beautiful looking lemon tart on the wall behind you and you're actually just tucking into Portuguese tarts, which is making me very jealous and quite hungry. How fresh are they?

Chris Ormrod:

This one would've been out of the oven in Lisbon on Monday of this week and then whizzed over to us, or they're frozen and then sent over. But there's nothing nicer in my life than trying freshly baked or freshly cooked food. This is a great way of making sure we're getting the right quality here, which is what we want, which means somebody has to eat it. It's a tough gig, but you know what? I love it. I wouldn't change it for the world.

Mark Greaves:

My first question, I described you as a serial food entrepreneur and we're going to talk about would you agree with that description? But I think we've already hit on the reason why you might like being a food entrepreneur at that stage. Would you agree with that description?

Chris Ormrod:

I don't know, I've never thought of myself in that respect and other people use that tag, which I can understand it's useful. But I feel a bit of a fraud in that company because I've never set a business up from scratch, I've had loads of ideas but never really had the courage to go ahead and do it. I kind of think of myself more as a property developer for businesses, I tend to find businesses that are actually beautiful businesses underneath it all. Perhaps have gone a bit moribund or a bit slowed down or are just missing something from a particular angle. Then I go and spend a couple of years doing it up and making it better and giving it a renewed purpose and a sense of vigour and direction. That then typically makes it attractive to a potential acquirer. I love the fact you can call me entrepreneur because that puts me with some huge exalted company, but I would always think myself as a business developer.

Mark Greaves:

I'd probably disagree a little with that, I'd probably put it into different stages of entrepreneurialism in that you have entrepreneurs who will start up a business, but we've talked about this in previous podcasts, that they reach a limit. The delegation becomes difficult, they can't develop that trust in the next level. Therefore, you need a different type of entrepreneurialism to continue with that growth to take it to the next stage.

Chris Ormrod:

I think that's a fair observation, actually. I think that's probably... In which case in a rocket analogy, I'd see myself as the second stage because the company…

Mark Greaves:

Which is equally important in the mission.

Chris Ormrod:

I think that's exactly right. I think the last company before Cakesmiths that I bought, was I bought from a chap who was retiring and he knew he wasn't going to be able to take it any further. He had the wisdom and the grace and the humility to accept that. When I bought it, he never once intervened with what I was doing and it was a seamless transfer.

Mark Greaves:

I think the Nick Rodda from Rodda's Creamery summed it up best in that what got us here probably won't get us to the next stage, and it's the recognition of that becomes very difficult. Your current role at Cakesmiths, what is your current role? You describe yourself as the CEO at the moment.

Chris Ormrod:

Chief exec at Cakesmiths and chief exec covers a multitude of roles, doesn't it? But ultimately, I'm responsible for where this business is going and setting the vision against which I want the management team and the colleagues here to deliver. I'm very clear, "This is what we're doing. This is the plan, how we're going to grow the business. This is the areas we're going to invest in. This is how we're going to work with and treat people and this is how I want customers to perceive us." It's a multitude of things, but ultimately this, whether you are the CEO or the MD, the founder, whatever you want to call it, I'm the person that effectively sits at the very top of the pyramid or the bottom of the pyramid if you want to use the inverted management theory, and then tells the business where it's going.

Mark Greaves:

That's quite a good summary within there. We talked previously on podcasts about the difference between strategy and mission and values and all that type of stuff. You mentioned about tone in there, that's quite an interesting definition of it.

Chris Ormrod:

I get frustrated, I have been frustrated in the past with people conflating, mixing up the phrase strategy and the phrase vision and values. Clearly put, if I can express it this way, a vision, if you're top of the tree, your view is, guys, I want to take that hill over there. That's my vision, we are going to take that hill. Your job is to work out how to do it and that is strategy. Strategy comes from the Greek word stratēgos, meaning military plan. Therefore, I can tell you guys what I want the business to do, but I pay you to come up with the how we do it and what's the best way of doing it. Now I will then challenge aspects of that strategy, but ultimately, if management decides strategy, you've got a much better chance of achieving it.

Now, values, you could talk for ages, can't you? About values and about how... But values is how I want this business to feel, how I want it to be for people who are working here, people who might be thinking of working here and customers that come into contact with us, and by the way, families of all of the above. I've worked with some of the best entrepreneurs I think in the UK business world, and they've all taught me one thing more than anything else. I learned this when I worked for Richard Branson at Virgin for two years, it was all about everything, all about people all the time. If you have happy people, then you will have happy customers. If you've got happy customers, you are there.

Mark Greaves:

I couldn't agree more with that. We've talked about the balance between people, profit and planet before and the people element of that being really key and also the culture that comes from amongst them being key. Let's step back a bit, that's your current role. You started quite away from your current role, you started as an actor.

Chris Ormrod:

Well, actually I never quite made it as an actor, I failed as an actor. I had an overarching desire to be on stage. I loved winning the applause of people and I loved performing and standing up and doing stuff, so I had the chance of doing a degree in theatre and drama, which I did with a view to going on stage or into film, et cetera. As part of my degree, we used to go to the Edinburgh Fringe Festival each year and we put on in my final year the big show. That's where theoretically, the agents turn up, you get signed up and you're away forever. I had the world's worst set of reviews for a performance of a play I was in. Because you rush south in the morning to get the Scotsman, which is the morning newspaper where all the shows are reviewed. The show I was in was slated, but I was singled out for a particular critique. But I also therefore then met my future wife who was also doing a theatre degree. She happened to win a Fringe first and went onto the short space in London.

My acting career lasted a millisecond of the jot. The only claim to fame I've got is in my flat mate at uni was a one chap called Andy Serkis, who people who have watched Lord of the Rings or King Kong, he's the body double for it. Andy, he was a geography student who I convinced to come and do drama, so that's about it. But all joking apart, what drama courses do teach you is the ability to stand up in front of a group of people, control your natural... Sometimes your breathing or your fears or your thought process and be able to put across in an interesting way, a concept. As I sort of segued into what seemed to be a fairly natural career in sales, it stood me in good stead. I think looking back... Although I think I'd still like to have had a go at being in a film of some description, I did do an appearance on the Noel Edmonds Late, Late Breakfast Show once to much critical acclaim for my family, but that's about the lot.

Mark Greaves:

How did you go from that to working for people like Mars, Häagen-Dazs, Virgin, et cetera?

Chris Ormrod:

Basically, I went back to Brum, which is where I'm from, having failed to become an actor and just looked in the papers for jobs. As you did at that stage, there was no LinkedIn, WhatsApp, there was no online search engines. There was a job advertised for Mars as a sales rep in Central Brum. All I remember, vividly remember, is that they were going to pay me in six months my entire student grant for the last three years and I got a free car. I applied for the job and hugely fortunately got it, and I think Mars fundamentally opened my eyes to what the world of business and commerce could be about. I worked with some great people who have all gone on in their own world to do great things, and I've stayed friendly with the majority of them.

Mars, in many respects, was my business university education and I have nothing but the highest praise for it. After Mars, I ended up with people that I worked with who phoned me up and say, "I've just joined X, would you come and join? I've just done this, come and join." Really, it was a bit of an ad hoc career progression but I left to work for Häagen-Dazs, the ice cream business just as it set up in the UK. I did that for a bit and then I worked for a soft drink company. At that point we did a JV with Virgin, I ended up working for Richard for two years, which was just the beginnings of what I now know was the beginnings of a career to run my own business.

Mark Greaves:

What did you gain from people like Richard Branson around you? What did they teach you?

Chris Ormrod:

Not to be afraid of anything and to absolutely in the nicest sense of the word, just loose enough and have some fun at work. If you can make your business differentiate itself from those around you, your competitors, if you can engage with your customers and your staff in an honest, open manner. Just to a certain extent, don't wear a tie, I learned that one very early on with Richard when he cut it off. You only wear a tie in the Virgin Group if you're an accountant. But just to be honest and just to break boundaries. A classic example, I was really frustrated once, Richard came back into the office while he had been at a meeting in London and he said, "We're going to run the V Festival in Reading, be like a Glastonbury in Reading." I said, "Well, really exciting Rich," I said, "Well, who's going to run it?"

He went, "Well, you are Chris," and I'd lost my temper for the first and only time I lost my temper with Richard and said, "I haven't got the time of day, Richard. I'm doing this, this, this..." Virgin do run themselves a bit lean and a bit mean. He looked at me and smiled and said, "No, you'll be fine, you'll do it." I said, "Rich, I absolutely can't do it." At which point my then PA, Nicki, piped up and said, "Well, I'll do it." I turned around and I was going to say to my eternal shame, "But you're just a secretary." Before I said that, Richard looked at me with his megawatt smile and said, "There you go, problem solved," and bounced out the office. Well, Nikki and her pal rented a caravan and ran that festival, the very first V Festival to huge critical claim.

A few weeks later, Richard was interviewed on I think BBC Radio 4 and he name checked Nicki. "He said, "At Virgin we have a history of people rope to see how far they go before they hang themselves and then we rescue them before they die." He said, "There's one particular girl within the empire, Nicki, who did the Virgin Festival." It was just magnificent and what I learned from that was, do you know what? You can ask people to do some amazing things and you've typically got better people in your organisation than you ever give it credit for. Every day here I am staggered when I talk to people and I find out what sort of interests they've got, what hobbies they've got, what they do outside their work time that makes them motivated in life. If you can tap into that, then you are a lucky person.

Mark Greaves:

We come back to that people thing again and again, which is a topic we've covered a number of times. On a side issue, you once were a security guard for Richard Branson to a Baywatch star.

Chris Ormrod:

Yeah. Well, we were launching Virgin Cola and we really admired the Coca-Cola wasp shaped bottle. We were trying to work out what to do as a Virgin equivalent, so Richard came with this idea... well we originally called the Mae West, and then Richard said, "No, who the modern Mae West would be. I know, Pamela Anderson." He then bounded out the room and I was the sales director of Virgin, I looked at James the Marketing Director and I said, "Where's he gone?" Anyway, 10 minutes later Richard came back in all smiles and said, "Sorted, she's coming across on Sunday to help us with the launch." I said, "Who are you talking about, Richard?" He said, "Pam Anderson." I said, "Get away." He said, "No," he said, "You don't know."

He said, "I've just appeared in an episode of Baywatch, which hasn't yet been broadcast. I got to know Pam really well. I've just phoned her up, offered us some free tickets on Virgin, on Atlantic to fly over and I'll pick her up." I said, "Well, do you want me to pick her up from the airport?" He said, "No, I'll do that." He said, "But Monday you're in charge of security." Well, we must have had 140, 150 of the world's photographers outside the event where we were staging the stunt. The black Ranger Rover turned up and back door open and out came Pamela Anderson. She looked at me and Rich must have wound her up it, she went, "Hi, you're Chris, you are in charge of my security." I was just in pieces. Then she said, very professionally, "Which of your customers you want me to meet?"

I went, "Well, I got Sean here from Tesco's, I'm sure he'd like to say hello." And I thought this is surreal, I'm in the middle of London with, at that point, one of the world's mega stars introducing her to the soft drink buyer from Tesco. It was one of the happiest days of my life, she was an absolute star and a real joy to work with for that period of time. If you can create those magic... I'm really never going to get a chance to do that again. But those magic moments, that stayed with me for years. It's a lovely way in which Richard... Subsequently, when I left Virgin and my first son, Henry, was born three months, 12 weeks premature. I had a note from Richard saying that one of his children, I think it's Holly, his daughter, had also been premature and that they soon grow up and everything will be fine. I just thought that was a class act, there's a chap who absolutely understands what it's like putting people at the heart of the organisation.

Mark Greaves:

We'll come back to that. Let's go back right to the start of your entrepreneurial career then. From there you went into Ministry of Cake as it became named, how did that transition work?

Chris Ormrod:

It was fantastic, I had no real idea what I was... I turned 40 and I just went home one night. I was living up in Suffolk and I said to Kate, "I can't do this anymore. If we are really going to break out and do all the things we want to do in life, then I need to earn more than we're earning now. I want to run my own business, I've just had enough." We decided that we were going to sell our house up in Suffolk, take the equity out of it and go and find a business. In a sense, that's the easy bit. The hard bit is then finding a business because you're not the only person looking to buy them. Of course, I was a nobody with no real... I had a reputation in the corporate world, but nothing in the private equity or the business back world.

I engaged the service of a corporate finance advisor who was brilliant and was really helpful. We found a business on its knees down in Somerset called Maynard or Maynard Scotts. It was an old dessert manufacturer. I'd always been working in retail, selling to supermarkets like Sainsbury's, Tesco and Asda and Waitrose. This business just did catering and food service, so it was the backend of nothing really. But it was any chance I had, so I met the owners, made them an offer to buy the business on the basis of working there for a year to get it to a level of profitability. I had 12 months to get it turned around. I think Stuart Rose coined the phrase, "Because there's no plan B with Marks & Spencer's." He was exactly... I had no plan B, I had to make that business work.

If I had failed, I'd have lost the money I invested in it. I would've had to go out to the corporate world and effectively start all over again. There's no greater driver than the sense of what it might mean to fail. But you didn't think about that. I bought the business and I then realised quite quickly that it was seen by customers as a great product, but a really stayed old-fashioned, antediluvian business. I thought the first thing I got to do is think about... I need to give this a quirky name. What am I going to call it? Sat in the kitchen one night with Kate, my wife, and we chucked around some names. She said, "I really like the name Ministry of Sound." I said, "What about Ministry Cake? Because I can call myself prime minister, won't that be a blast?"

Quickly registered the domain, called it Ministry of Cake, and that was it. This was a great idea of Kate, sometimes great ideas snowball and people got on it. My sales director called himself the foreign secretary, clearly my finance director called himself the Chancellor of the Exchequer. It just gave us publicity coup after publicity coup. To the point when Nick Clegg was the deputy prime minister and Nick Robinson was following around, they came and filmed a three-hour slot at Ministry of Cake because they could use all of the cliche phrases like the icing on the cake, the last slice, sharing the pie. Nick Clegg served me with a slice of cake as a photo op. It all came out of that name, so the business was good fun. I love dealing with customers and that was reciprocated, we grew the business very quickly from four and a half mil turnover to the second time I sold it, we got it to 32 million. We grew it fast.

Mark Greaves:

Well, you talk about the second time you sold it, you bought and sold it twice in effect-

Chris Ormrod:

Yes, that's right.

Mark Greaves:

... over a sort of 10, 12 year period. How did that actually work?

Chris Ormrod:

Well, when I bought it the first time... Literally you buy the business and I'm now backed by private equity and some of your listeners will be familiar with that and others won't. I've had a great time with private equity and I think if you get it right and it works, there's no better experience. I enjoyed the backing of private equity. We'd only owned it for just under two years when the phone went one day. Effectively, it was a potential business looking to buy us. We thought, well, if they're interested then others might be, so we discreetly put the business on the market. At that point, Greencore, the big Irish food conglomerate, were looking to expand away from retail and do something in the world of food service. They saw us as a strategic land grab for them.

They bought us and I agreed to stay with them for a two-year period for the earn out. The idea was I'd sell it to them, work there for two years and then I'd go and do something else, and same again. But it was about three weeks after I sold it that some of your older listeners might recognise the phrase Northern Rock closed their doors and the world went to hell and back in a hand basket. That wasn't the time to be buying a business, I didn't think. I hunkered down and sadly became a corporate fiend again. But Greencore, great business. Working for Patrick Coveney, who was then the chief exec, was pretty much like running my own business. But I knew relatively quickly, although they bought me to get into food service, they had then also tried to America, and America was starting to take more of their time and effort.

Very kindly Patrick said, "You know what? If you want to buy Ministry back, we'll let you have it. But it's got to be a fair valuation. We're not going to let you have it on the cheap." I bought it back from them and ran it again. But having learnt the first time round this time, I knew exactly who would be the acquirers when I bought the business. One tip I'd give people is, if you're going to borrow a lot of money to buy a business, you need to have a pretty clear view in mind of what your exit route is going to be or what your your exit options are. I knew exactly, as it turned out, the company that I thought would have a major interest with the people that bought us the second time around.

Mark Greaves:

I suppose there's a lesson in that. You talked about purpose earlier and staking it, that's where we want to be. I suppose that applies to the generalities of owning the business as well as working in the business itself.

Chris Ormrod:

I think that's a really interesting question because there in lies the difference. I think there are some businesses like Iceland, is for example, where Richard Walker is running a business clearly for the future, for the family, for the future. The Samworth Brothers where I spent many happy years working as sales director at Ginsters, David Samworth, that business is in trust for his family for the future. They don't have that exit driving options. But when you run a business as I do in order to make money from it, then effectively you only really make your best money when you're buying and selling businesses.

The aim is, and I'm very open with the staff when I buy, this is what I do, this is what I'm aiming to do. But my promise to you is we will make this business bigger and better, so that when it does become owned by somebody else, you will have career choices and paths within that new organisation if that's what you choose to do. If you don't, and I can help to develop you... For example, my HR manager here, really ideally in five years time would love to be an HR consultant and working for herself. We've worked out over the next five years, how can we best use what we do here at Cakesmiths to help her get to where she wants to go? I'd be no happier person if she ends up one day doing that.

Mark Greaves:

I think there's an odd thing we do measure sometimes about staff turnover and stuff like that, and we get very obsessed with statistics. Whereas actually, if you are developing people and they are going on to be more successful, then that sort of staff turnover is a good way of doing things. I've seen numerous examples over the years where they go onto new roles and then they'll find something that will help you with your business in the future.

Chris Ormrod:

I think that's right. I learned that at Mars, there were a lot of very good people at Mars. Mars employed some brilliant brains. But ultimately, not everybody can get promoted. You end up with some very, very, very capable people, and I was one of them, who couldn't get the next level promotion for all the right reasons. There were better people than me doing it. I didn't get promoted at Mars, I was really miffed that the bloke who got the promotion, Rich Baker, went on to become Chief Executive of Boots and chairman of Whitbread. I can't argue with that, he's a good guy. My wife thought he is better looking than me, which never helped.

Mark Greaves:

I'm not sure I'd admit that, we might cut that from the podcast. You then went on to be, and I've got to be careful with my pronunciation here, chief flavourista at Flavourworks after that.

Chris Ormrod:

Well, this is the lovely one, this came from nowhere. I got phoned up, I'd just sold Ministry of Cake the second time, and this time I wasn't staying with the new... The new acquirers are French, quite rightly wanted to run that business in a different way. I was looking at a couple of options and I had a phone call from a private equity house who were looking to bid into a business, but the chief exec designate had pulled out, would I be interested? It's very similar to…, so it was a lovely business in the middle of Wincanton and Somerset, had a particular niche in the marketplace for creating marinades and sauces. The sort of things that you see in sachets with chicken fillets in the supermarket. It was beautiful products, but again, quite tied commercially. It used to be called Markus Products because the son of the owner was called Mark, and therefore they called the business Mark and us, or Markus. I thought, in a world where these little ingredient business, how do I get to stand out?

The more I sat with customers and when they tried products, they all said, "Gosh, this is lovely and you get such great flavour." Actually the customers gave me the name, I just went home one night and thought Flavour Academy, Flavourworks, that'll do, and so we called ourselves Flavourworks. I thought, I need to give myself a title. I can't call myself prime minister anymore, intergalactic empire of all known things, that wouldn't work. I thought chief flavourista, I'll call myself the chief flavourista. I encouraged everybody to come up with a quirky name on their business card, then on the flip side have their normal title. My HR manager, Janine, called up the head of resauce, spell resauce, as in sauce, as in brown sauce. We had all sorts of fun. But once people get engaged in that and they buy into it, as long as it's not seen as frivolous and you've always I think got to be a little careful, I see lots of examples of what I call just forced frivolity. If you're going to do it, it's got to be genuine, you can't force it. People need to come into it.

Mark Greaves:

I'd agree. I see more of that on the American side than I do on the British side of things, they tend to take it to an extreme.

Chris Ormrod:

It just comes across as a bit insincere. Whereas, if you get it right, it can be beautifully empowering. I design some t-shirts for all members of staff where we had official taster on the back of it and a proper design on the back. I was once taught, if you're going to do a t-shirt design, make it so good that your staff wouldn't mind wearing it down to the gym. Then you'll know you've got your designs right. I said, "T-shirt, let's see who can get this T-shirt photographed in the most bizarre places in the world." Well my lawyer, if you're listening, Stuart, you know it's you, sent me a photograph of him wearing the T-shirt 50 feet down below in sub aqua kit. It was fantastic, it’s good fun.

Mark Greaves:

I happen to know that lawyer and that doesn't surprise me at all. He would've taken that as a personal challenge at that stage.

Chris Ormrod:

He does.

Mark Greaves:

Slight divergent at that stage, you also, thank God, involved with Somerset Larder. How did that come about?

Chris Ormrod:

Well, near where I live, they're building Hinckley Point, the nuclear reactor, nuclear power station. I think that it's backed by EDF, the French electricity company. But they have created a big business called NNB, which clumsily but stands for Nuclear New Build and NNB are responsible for the onsite building and delivery of that power station. The NNB guys, part of the remit from the government in giving me permission to build it is that they do as much good as they can commercially for the local environment and the local area. They wanted to take food from producers around it and a group of producers got together, but it's a huge project, Mark. There are 8,600 people eating four times a day, seven days a week, 365 days a year. Logistically, it is a serious bit of business.

The caterers at the time that were the local caterers at the time just couldn't cope with it. They were a Bristol firm, used to doing office functions and a few weddings. Effectively, NNB were getting to stage where they were going to have to go to one of the big multinationals, which they didn't want to do. Then I got a phone call saying from a commercial app, could I go in and give the guys a hand to shape themselves commercially. Then they could keep the supply contract, which is what NNB wanted to do. I got involved and I brought in an MD and formed... It had been a not-for-profit company, which was not fulfilling its purpose. I changed it to a proper business owned by shareholders, so it was some commercial impetus in the business. We formed a small group and we set about running as a proper catering business and it just took off.

We went from revenues of zero to about 6 million quid in 18 months. When I left there, when I sold it, we were employing 450 people. The proudest bit, Mark, is that those people, broadly young people were all from the local area. They were being taught in the hospitality industry, entertainment, food, manufacturing, logistics, these lovely skills and getting paid really well for it. It's going to employ a thousand people on an ongoing basis when the building is finally finished in the mid-twenties. But I'm very proud of that business. Then we got a phone call from a British catering business, BaxterStorey, that we're looking to get into the world of business and industry and they saw us as an exemplar of what you can do. We very happily put the business into their ownership and I think they've done a superb job with it.

Mark Greaves:

I think the controversies of nuclear energy and power, which is raging across Europe at the moment, as some nuclear stations are opened and some nuclear stations are closed. I think that hides the underlying story of the sheer scale of the operations.

Chris Ormrod:

It's massive.

Mark Greaves:

Of actually constructing and running these things.

Chris Ormrod:

Whatever your personal view of nuclear power, per se, the construction of it and the way in which they're training lots of young people in the world of construction and food, there are a lot of good people going to come out of there with proper qualifications to go and do things elsewhere. The interesting one, for me, I've never been asked to do a 10-year forecast before. I'm used to doing one year, two year, three year, occasionally a five-year plan. But the nuclear boys, their forecast horizons are... Imagine your menus today, because you've got largely physical labourers building the site, so you are heavy on carbohydrates, you're heavy on big chunky food stuffs.

But in eight to nine years time, the workforce will be broadly software engineers, intellects. Therefore, you're looking at quinoa and edamame beans and salads. I've never gone to that level forecasting before. But the other one that was interesting as you get a little bit older in your career, being the chairman of a business as opposed to being the MD, it's a bit more like being a grandparent. At the end of the day, you can give it back to the team and go, "There you go, guys." But I really enjoyed sharing it and I enjoyed the experience of helping that team really get under the skin of what they could do and delivering a brilliant business.

Mark Greaves:

That brings us back to where you are at the moment, obviously your whole career based on the food industry. Why the food industry? What is it about the food industry that excites you and keeps on bringing you back?

Chris Ormrod:

I'd love food. I do love food. I think the reality of it is it's broadly recession resilient. I've been through two or three serious recessions now and COVID, and never had to lay people off and I've always been able to grow businesses during the course of that. I'm an optimistic person naturally, I would hate to be in a situation where I'm running a business which isn't in growth. I'd find that really hard, a difficult thing to do. Also, I think once you're in the food industry and you start to make a level of contact within the food industry, then I think we find it easy to stay here. I enjoy it, I really do enjoy it.

Mark Greaves:

What are the challenges for that industry going forward? Because the food industry's really strong in the southwest. Why is that and what challenges are we facing?

Chris Ormrod:

I think we've got a good food tradition in the southwest, particularly dairy and dairy related products and meats. The challenges, I suspect they're exactly the same as others. Energy prices are obscene in how they've kept going. Labour and labour availability, whatever one's view of Brexit, I do think we've had issues as a result of that in getting just people to want to come and work here. Forget what we pay, but we pay significantly above living wage and we still find it hard to get staff. Ingredient inflation, there's been a constant issue and a worry. I think managing all of that is normal.

What we've had to overlay here is the issue of significant and severe growth. This business has grown in the space of two years, tenfold. We sold 150,000 pounds two years ago in February, this February, we sold 1.5 million pounds in one month. I'm managing here a rollercoaster, it's an absolute rocket of growth. I often think that managing extreme growth is as difficult, if not more difficult, than managing no growth because you have to keep a very dedicated bunch of people making sure all the plates are spinning and you're delivering what you are selling to customers.

Mark Greaves:

I suppose difficult in a different way, it's that-

Chris Ormrod:

It's an enjoyable way, but it's tiring, Mark. You can see it, so you think, do you know what? You've got a bunch of guys and girls who are working incredibly hard to fulfill the orders that we're sending out. We're doing everything we can to help them and we've invested half million quid in new kit, half million quid in new labour. But it's good, but that's what we do, isn't it? That's what we are in business for, that's the hobby.

Mark Greaves:

I suppose, again, that comes back though to making sure that everyone's aligned on purpose. We talked in one of the last podcasts about increasing productivity, which is one of the British issues. If you've got staff that are properly engaged and understand the purpose, that itself lends to helping address the productivity gap.

Chris Ormrod:

I think you're right, I'd also add that it's really important to define what you mean by productivity within the organisation that you're in. How do you come up with a very crystal clear measure that allows everybody in the business wherever they are to understand? Here, after much debate, when I first started here, there were 20 odd pages of spreadsheet driven database analysis. But when you boil it down, we make cake and we have a finite number of people that make cake.

If we divide the number of cakes that we make by the number of people that work here, you come up with a cakes per person per week, or a CPW we call it. When I started here, we were making broadly 220 cakes per person per week. I just checked this morning, last week we made 312 cakes per person per week. That's near enough of 50% productivity improvement in the last 12 months as a result of working better, smarter. But people can tell me as I walk around what the number is because it's just one number. We've boiled everything down to one critical number that everybody knows and we have that as a common language within the business.

Mark Greaves:

I see that sometimes as a downside when equity get involved in that you end up draining in KPIs because-

Chris Ormrod:

You do.

Mark Greaves:

... everyone's trying to measure everything at the same

Chris Ormrod:

It's exactly right. I think you got to remember, as I said to the equity guys is, "Look, you guys are the financial backers, but I've run the business. I can give you what you want and I can certainly come up with a suite of bits that you need for your internal reporting, but I'm running this business on no more than 10 crystal clear measures. Productivity, sales, contributional gross margin, employee sickness, because that's a critical one for us to look at, because you can start to see the wheels coming off when people are taking too much time off, and then stock. Ultimately, for those of us who run businesses, just cash in the bank. Which is the one bit, when I first ran Ministry of Cake, I got everything else right, I forgot about cash in the bank. I got sales right, that really ticked off the operations' direction because he couldn't make enough. Then when he made enough I was told, "We're about to run out of cash." Oh my God, I didn't even think about money in the bank but of course that-

Mark Greaves:

Cash is the ultimate arbiter at that particular moment, isn't it?

Chris Ormrod:

It is. It really is.

Mark Greaves:

You mentioned earlier and when we talked before, you'd ultimately love to start your own business and grow that. Is that still an ambition?

Chris Ormrod:

For definite. It's just, as I said right at the very start, I don't think of myself as an entrepreneur because I started a business. I think you're right actually, Mark, that there are different sorts of entrepreneur and perhaps I'm a different sort. But I would love to start a business up from scratch and now I've got a little bit of money in the bank as a result of all the things I've done. Then there are things I can start to look at and decide whether that's what I want to do, because I just think it'd be a brilliant challenge. I'd love to... That's the one bit, I don't want to go to my grave not having had a go at that.

Mark Greaves:

Well, perhaps you can take to heart from the different levels of entrepreneurialism that we talked about. I want to come back on that name thing very quickly as we get towards the end of the podcast. We talked about names and the power of names in there, one of the best names I think I've ever come across was an early name, which was part of Maynard's, I think you were saying, Enchanting Dessert Gardens of Dr. Chocolate, which is such an image-painting name at that stage.

Chris Ormrod:

It's images of rivers of chocolate running through a brown valley of fudge, isn't it?

Mark Greaves:

You've got Willy Wonka in the background of that. The power of that name seems to have followed you through your career as well. You talked about rebranding Ministry of Cake, you've talked about Virgin Cola launches and stuff like that. What's that mean, really? What's that come to?

Chris Ormrod:

Well, all I'm ever trying to do is make myself, I said myself, my business, the business, stand out in a world where there's so much else going on around it. Trying to achieve a standout name or something... I worked for Häagen-Dazs when we were first launched in the UK. I'd phone up people and nobody would've a clue what Häagen-Dazs meant, who we were, what it was. It was only we came up with a load of adverts that drove the infamous starter for ten we knew where that was. But I also thought, if I could come up with a name... When I called my business Ministry of Cake, if I phoned up a company to speak to the buyer, if the person answered the phone went, "Ministry of Cake, cor that sounds… I wouldn't mind working there," then you knew you were halfway there. Flavourworks, just the same.

Cakesmiths, ironically is the first business I've owned in the years I haven't renamed because it does exactly what it says on the tin. Cakesmiths, I've had a much lower requirement to rebrand this business because it does itself really well. Just all I'm doing here is putting more nitrogen into the fuel tank. But I think the concept for me is always about whether it's you as an individual, and I think for those of us who are starting out in our careers, it's important to stand out. I'm just trying to stand out in the crowd and to make me a memorable business.

Mark Greaves:

I suppose that's so important nowadays, the crowded marketplace. Last question from my side, what's the most outrageous cake you've ever seen or eaten or been aware of?

Chris Ormrod:

I had the privilege of being asked to be a cake judge at the International Confectionery Cake Show at the NEC a few years ago. I think I make good-looking cake here and I think we do make some very attractive cake, but these people that I was judging the sugar paste and decoration exhibits. The people I was judging took it to a different level. The one that stands out in my mind, it's a real shame we can't do a visual on this, but I've got... You remember the Disney film Maleficent, where Angelina Jolie played Maleficent? A life-size version of that in marzipan and sugar icing. Believe you me, it was as realistic as they come, it was like a wax work.

Mark Greaves:

I can't beat that, that's a hell of a way to end a podcast at that stage. Thank you, Chris. Thanks so much for joining us, sharing your story with our listeners. Hope our listeners have enjoyed it as much as I have. Been really good to talk about the power of names, the importance of the food industry, and get an idea of that side of things. Thank you to our audience for listening to our latest episode of Business Noodles and Doodles. Hope you've enjoyed our conversation. This is the last episode of the current series, but we'll be back later in the year with some more episodes. Don't forget to subscribe to this podcast to get updates and notifications on when the latest episodes are available.