Rectory Foods hatches growth strategy

RECTORY Foods has embarked on a restructuring in a bid to reward high-performing staff with stakes in the business.

Charles Woolley, founder of the Manchester-based business, said: “My greatest assets in this business walk out the door at 5.00pm every day and I hope that they come back again the following morning. One way I’d like to do that is by restructuring so we can reward key employees and make sure they continue to add value to the group.”

The restructuring is revealed in newly-filed accounts for Rectory Foods, which sources, poultry, red meat, vegetables and other foods ingredients. In the year to July 31, 2011, sales increased by 34% in 2011 to £44.9m (2010: £33.4m).

Pre-tax profits more than doubled to £394,436 (2010: £157,388), but Woolley said such growth would be unlikely to be replicated next year.

This is partly due to greater investment in the business – he paid consultants from Deloitte to handle the restructuring, as well as investing more in business information systems and a rebranding following its move from Holmes Chapel into a corporate HQ at Bruntwood’s City Tower.

Moreover, the restructuring has involved spinning out a food ingredients business which was responsible for 30% of last year’s sales uplift into an independent, separately-financed division – Rectory Food Ingredients Ltd. It received backing from Royal Bank of Scotland Invoice Finance and NatWest.

“The idea is that business is distinct enough to warrant its own division, and it fulfils the brief of being able to reward employees.”

The restructuring has also involved the creation of a new group structure, which he said was carried out with an eye towards creating an eventual exit route for one or more of the three principal directors – Woolley, Nick Bowyer and Carl Scothorne.

“It will also allow us to try different projects,” he added.

Mr Woolley credits the recent growth in the food ingredients side of the business to a series of tender wins for food companies such as Kerry Foods, Birds Eye, Bakkavor and Patak’s.

“It’s quite different to what we do on the poultry and meat side, where hardly anything goes to tender,” he said.

The company increased its share of the market on that side of the business too, as he said the fruits of an earlier relationship forged with suppliers in Romania began to pay dividends. He has also recently been in Africa sourcing nuts, peas and products for the ingredients business.

“You have to get off your backside and go out and do business with these people,” he said.

“I went to a Chamber of Commerce dinner with Lord Green, who was telling businesses that they’ve got to go out and trade with the BRIC countries, and I felt a bit like saying ‘We’ve been doing this for 20 years – why have you just woken up to it?’

“But I suppose we’re dealing in commodities, so we’re not very sexy.”

Rectory Foods now employs around 30 full-time staff at its Manchester base, which is a drop of around 15% on the prior year.

Mr Woolley said some of this came through natural wastage as short-term contracts expired, but the company also reduced its sales overhead towards the end of 2011.

“We always had a lot of business development staff and as things became quieter I asked myself ‘can we justify it?’. I don’t like to lose staff, but in hindsight it was the right thing to do.”