Talking Business: Jason Wouhra of East End Foods

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In the latest in a series of ‘Talking Business’ interviews, Jason Wouhra of East End Foods chats to TheBusinessDesk.com publisher Marc Reeves, and KPMG’s Narinder Paul.

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Keeping it in the family makes business sense

By Narinder Paul, partner working with entrepreneurial and family businesses at KPMG in the Midlands

Entrepreneurial businesses face a number of challenges as they evolve and grow, and family run businesses face a unique set of these.

While the focus on good ‘housekeeping’, covering business basics, are as prevalent in these businesses as any other, succession planning and evolving company structure, take a different form.

This is often because the business is established by one entrepreneur who works hard to build a successful operation.  As the company begins to grow, more family members become involved and crucial to the future success of the business will be how that entrepreneurial spirit remains.

Family businesses by their very nature are all very different in not only their capabilities, but also their ambition.  Here in the Midlands we are lucky to have strong businesses that have survived one, two, three generations.  Some of these business people remain at the helm in the traditional sense and are prospering.  Others are seeking alternative structures.
 
One such approach is that of a ‘family charter’.  As a business begins to grow, different skill sets are required to enable that business to realise its full potential.  It is for this reason we are seeing an increasing number of family-run businesses seeking to implement a ‘family charter’.  This charter enables a second or third generation of the family to reduce their involvement and enable them to bring in non family members to run their business on a day-to-day basis.

With conditions in the UK economy providing food for thought, I’d encourage family businesses to give their future direction serious consideration.   

A family charter offers the ability to widen the family’s thinking and invite into the organisation the possibility of a new direction, either through diversification or obtaining skills to allow entry into new markets.

Sometimes businesses need to have some fresh thinking, and growth within family businesses tends to be a main stimulus for this.

 Narinder Paul, KPMG

Narinder Paul, KPMG

Talking business KPMGT approved logo

The quiet success of East End Foods, the ethnic food and wholesale business of the Wouhra family has perhaps gone relatively unnoticed in the West Midlands since its humble beginnings exactly 40 years ago in Wolverhampton.

But as the business enters its fifth decade as a £100m turnover concern with a brand new wholesale depot on the former site of Birmingham’s iconic HP Sauce factory in Aston, the secret is now most definitely out.

In the latest of our Talking Business series in association with KPMG, I met East End company secretary Jason Wouhra in the new premises with Narinder Paul of KPMG.

Jason is part of the second generation of the Wouhra family to lead the business that was founded by his uncles after they immigrated to the UK from New Delhi in the early 1970s. Jason has taken the lead on the new development, with the Wouhra’s typically sleeves-rolled-up-approach keeping him on-site for much of the eight month construction period by contractors John Sisk.

He still found time, however, to become the first deputy chair of the newly formed Black Country Local Enterprise Partnership, as well as sitting on the regional board of the Prince’s Trust. He’s also an active supporter of the Institute of Directors, among many other commitments.

The East End ‘secret’ is one that is deceptively simple, based on the family’s continued stewardship and leadership, but is also one that could be too easily dismissed by those business people raised in more ‘corporate’ environments.

Its benefits, however, are writ large in the new £10.5m wholesale depot, which will soon be joined by a hotel, a cookery school and an innovative ‘urban farm’ development.

And East End’s new wholesale palace is no old-fashioned cash & carry emporium, says Jason on a tour of the new facility.Jason Wouhra, Marc Reeves and Narinder Paul at Eastr End Foods

“We’ve taken very much a retail approach in the new development,” he said. “Wholesale is becoming much more consumer focused and we’re even more a relationship business than ever before.”

The new depot is aiming for a weekly turnover of £2m. Visit on any day of the week and owners of small independent shops – Asian corner shops are the Wouhra’s bread and butter – are there in their hundreds stocking up on East End’s own-brand imported and processed rice and spices as well as everything else you might want from your local store.

The Wouhras pounced on the iconic former HP site after owners Heinz moved sauce production to the Netherlands in 2007, with the site demolished in late 2009. East End started construction in early 2011 and it was completed pretty much on schedule.

The development’s swift progress is, says Jason an example of the benefits of running a family business.

He said: “Sometimes family businesses can seem over-prudent, but this pays off in situations like this because we can take our savings and put them straight away into the business. We try to borrow as little as possible. There’s a very tiny amount in this deal, but even that will be cleared very quickly. This may be a good time to get bargain plots for development like this, but how many businesses actually have the resources to hand like we did?”

“If you look back at our history and how we started, my uncles went without for many many years. For us the business comes first – you feed and water that plant and in time create a good sustainable business. “

But success also brings its challenges. Jason said: “The competition nowadays is intense, and it’s not always fair. People are imitating our brand – finding cheap materials and attaching our name to it. As we get bigger, we see more and more of this and have to take major steps to protect our intellectual property.”

Other challenges come from the double-edged sword of relationships with the major supermarket chains, where the East End brand has become particularly visible in recent years.

“It’s very difficult to make a margin in this market,” Jason says ruefully “and it’s a growing part of our business as they buy in such volumes. But we won’t let them get the lion’s share – that’s a risky scenario.”

As more of the major chains branch out with smaller outlets in smaller neighbourhoods, Jason and his family are well aware of the increasing pressures on East End’s mainstay customers – the corner shops. That’s why the depot is full of offers, special product lines and even business support such as branding and point of sale marketing.

With the new depot open and doing a roaring trade from day one, what is the next challenge for the family business?

“We are very much in the process of succession planning, and then we’re looking at some serious expansion of the East End range and looking towards the American market. There is such a lot of potential, so it’s all about playing the right cards and doing it sensibly. “

How is the nature of the business changing? Is it experiencing the typical growing pains that come when a small family concern starts to morph into something much bigger – and potentially more corporate – than its origins? This can be a break point for many businesses.

“There’s a real knack to getting this right, says Jason. “If you start with a shop, that turns into a depot, and then two depots, the business is controllable within the family and by the family. We’re at a stage where  the founders are getting older and we have five of us in the younger generation taking more and more responsibility, and looking to put in many more ‘corporate’ policies and processes – but you can’t lose your DNA. As a family business, you simply cannot lose that essence of what you’re about. If you lose that, you’re the same as any other major company.”

So how would he define that unique DNA of a family business?

“One of the intrinsic characteristics is our timeframe. We don’t think in terms of three to five years – we think in terms of generations. I ask myself what effect a decision made today will have on later generations of the family – that’s what a family business is.

But with the long-term view comes short-term flexibility.

 “With the recession you have to be able to think on your feet,” he says. “You don’t have time to endlessly strategise and analyse – and family businesses have the capability just to get on with it.

“The customer base though is changing quite quickly, and we’re finding that those independent businesses who are reinvesting in things like refurbishments and concentrating on their customers and communities are doing well. These ‘fascia store’ businesses as we call them are up 9% per annum at the moment. Those who aren’t putting money back into their businesses are having quite a tough time of it, especially with competition from the big multiples.”

But Jason remains bullish for the fortunes of the corner shop sector overall. “I’ve heard the doom mongers forecasting its demise for the past 15 years,” he says, “but be assured we wouldn’t be investing as much in facilities like the new depot if we shared that view. The industry is certainly not dying but you have to be switched on and you have to take on that competitive battle.

“There is a concern that the government needs to intervene to ensure that differentiation between the multiples and the independents is retained.

“You might say that would be anti-competitive, but I think it’s anti competitive when you’ve got one of the massive supermarket brands owning a dozen outlets within a mile of Birmingham city centre. You can argue that the multiples are anti competitive in that they have disproportionate clout in the marketplace.”

Clout is something that the already strong East End brand has in abundance, however, with an ever increasing penetration of the market in both the multiples and the corner shops that are its mainstays.

The Wouhra family appears to be on the cusp of taking that brand to new heights, but with an approach that seems very likely to keep their feet firmly rooted to the ground.