Christian Mouysset, Tenzo28th November 2018
What’s it really like to start a business in hospitality?
We started an interview series to find out. This week, we talked with Christian Mouysset, Founder of Tenzo, about the end of Hummus Bros, why high street restaurants are closing, what the government should do to help the industry and how actionable data to come to the rescue.
You went to Cambridge, then opened a grab & go Hummus place. That doesn’t seem to be the natural trajectory for people. What attracted you to food & drink?
Wait, isn’t that standard?
It’s starting to become that way!
A Cambridge computer scientist opening up a Hummusia…
Oh, that’s the term now? Hummusia?
It is in Hummus restaurants. And I totally agree, my parents were like ‘what the hell!’ But seriously, Ronan – my Co-Founder – and I loved hummus. When you’re a student, it’s the ideal snack. You can grab it from the fridge, eat it with everything, it’s filling, it’s healthy…I could go on.
Ronen and I agreed that we wanted to start a business together. What really attracted us to hummus was the fact that anyone could eat it: vegetarians, vegans, any religious group. And there was no strong supermarket or high street brand at the time, so we saw a chance to develop one. The product in supermarkets really was just terrible.
Has that changed?
Most of the hummus in supermarkets is produced by 2 factories in the UK. Waitrose, Sainsbury's, Tesco, whatever, it all comes from those 2. I still think the quality is a little subpar today.
In many ways, we were too early to the market. The whole vegan / vegetarian market hadn’t quite taken off; it wasn’t as well known or as in demand back then.
"We did a calculation one day to see what percentage of our takings we were paying in tax and it was close to 50%. And we couldn’t see the light at the end of this tunnel, so the business had to close"
In London, we’re starting to see more Levantine restaurants opening, do you see this market continuing to grow?
I hope so. As I said, it’s healthy, it’s tasty and it still has legs.
The issue is less the product and more the market. Looking at London in particular – Brexit and business rates and so on – there’s a realisation that the way businesses are taxed needs to change. Amazon doesn’t pay VAT on all the products they sell and doesn’t have to pay full corporation tax because it can essentially export some of its revenue abroad. It has a very different cost base to a high street restaurant or retail store, and it’s playing a part in the downfall of the high street.
It’s not so much whether we’ll have more Levantine restaurants; more whether we’ll see more restaurants full stop.
It needs to be a level playing field. The high street is all about community and its success limits crime and fosters healthier societies, just to name a couple of benefits.
In the States, they’ve started to take steps towards taxing Amazon – and businesses of this ilk – more, lead more by Trump’s personal animosity to Jeff Bezos more than anything else. What will it take to change the way of thinking in the UK?
It’s not just tax, it’s property law too. You sign 10-year deals there the rent reviews are upwards only.
Landlords have had the upper hand until now, but I can see a lot of high street businesses struggling which may change that. I mean, they have started to struggle already. I think 1,000 restaurants closed last year and people predict more will this year… and that’s just restaurants. Something isn’t working.
These huge number of closures will make people sit up and question what needs doing. And this will have serious implications for landlords and the government.
Speaking of serious implications, Hummus Bros announced it was entering administration a couple of days ago. Tell us what happened.
It’s very sad. It’s 13 years of hard work coming to an end.
Running a restaurant has been the hardest thing I’ve ever had to do: getting a good team together, developing the right atmosphere, finding the right product. The really tough thing is that you’re generally open 15-16 hours a day, 7 days a week typically, and trying to keep a team together, motivated and thriving is just so extremely difficult. I’ve learnt a tremendous amount.
Funnily enough, we closed on the second anniversary of Brexit. Like a lot of restaurants in this city we import a lot – fruit and vegetables from Europe, chickpeas and tahini from further afield that are priced in Euros and Dollars – and these prices shot up after Brexit. Clearly this has a direct impact.
Simply, margins decreased while business rates increased. I’m a strong supporter of the increases in the minimum wage and new pension commitments, but you have to look at these as a whole.
We did a calculation one day to see what percentage of our takings we were paying in tax and it was close to 50%. And we couldn’t see the light at the end of the tunnel, so the business had to close.
The EU subsidises agriculture – we still subsidise coal production in this country remarkably. Considering the role that restaurants and the high street in general plays in employment, the economy and community, should the government subsidise it too?
It’s a difficult one. I’d love to know what the difference is between total revenue vs. tax for each industry out there. If you look at the likes of Facebook, Amazon, Google and so on, then I imagine this number is very low.
My view is that, if you want to operate in the UK – if a UK resident is paying for an ad to be produced or it’s targeting a UK consumer – then that should be taxed and paid in this country.
I wouldn’t necessarily say that requires a subsidy, but we need to reduce the burden of tax on restaurants.
You’ve obviously transitioned into the tech industry with Tenzo. What prompted this?
I was banging my head against a brick wall at Hummus Bros trying to get any data out of any of our systems. I’d speak to our managers and it would be so difficult to get a real view of what was or wasn’t working. And if you don’t have this, how can you hold a manager accountable for their performance?
We’d ask them to forecast sales for the following week – and by the way, if you don’t have an accurate forecast how do you know how much food to order or team members to roster – and they would typically use the previous week’s or last year’s sale as a proxy. That was based on the tools they had available.
We realised that by adding in weather and events, and combining these with past performance, we’re able to forecast 40-50% more accurately, which translates to proper savings.
We can answer questions like, who in the team can take the most transactions per hour? Who is you’re best up-seller? That team member should be working during peak hours, right? More revenue for you, better service for your guests.
Labour; inventory; if you don’t have a real time view on a device you can use on the move, you can’t hold your team accountable. What we’ve built is a tool that can be used on managers’ mobile phones, that provides simple, actionable insight to help them avoid waste and increase profits.
"Managers don’t want to be in a small office at the back of the restaurant. They want to be interacting with guests and team members"
We’ve talked at length on this blog about the divorce between hospitality and tech. You’re having these conversations all the time – how do you translate the power of tech to people that might not see it?
Things are changing quickly. When we started Hummus Bros in 2005, there was no tech. At all. We received orders by fax, no lie.
Today, restaurants have multiple tablets and integrated tech, so things have moved on. People are also being reminded of the power of data by the media, so when we inform people that we can give them and their teams data that will provide them insights and save them money, they’re prepared for it.
Ultimately the proof is in the pudding; our customers rave about it.
You’ve seen both sides of this transaction. What do you think will change for managers and owners as a result of the advent of tech?
Managers don’t want to be in a small office at the back of the restaurant. They want to be interacting with guests and team members, not downloading CSVs, copying and pasting data and preparing reports. They should be analysing it in seconds, not compiling it in hours.
Data will help them to run their business.
Who do you think gets tech right in the on trade?
Caravan for one. Those guys are amazing and really thinking about the role of technology in their business. I’ve always been very impressed by Pret. Really impressed by the team at Mitchells & Butlers too.
They’re all embracing the value of data and the vast amount of data that is now available.
Scary question. How long before a mid-sized group take on a data analyst?
Well, Pret have done it. But for a mid-size group…I don’t know. I think they’re better off finding an agency to support them. Because data can do so much: fraud prevention, forecasting, customer behaviour, menu engineering.
There’s so much application that finding one person to undertake all this when you could outsource it is probably the wrong step.
"Amazon doesn’t pay VAT on all the products they sell and don’t have to pay full corporation tax because they can essentially export some of their revenue abroad. They have a very different cost base to a high street restaurant or retail store, and they’re playing a part in the downfall of the high street "
How do you coalesce your view on big tech with running a tech business yourself right now?
We operate in the UK, we pay our taxes in the UK. If you run your business in a fair way, then I have no problem with you. I have huge respect for FAANG and many other ‘big tech businesses’, but the way that they are interacting with governments, and vice versa, is wrong.
I know they have a duty to their shareholders to maximise profit but they also have another responsibility to help people. I believe that tech is a real force for good in many ways. There will always be bad actors of course and governments need to regulate for this reason.
To be clear, I’m not anti-big tech at all. But I am opposed to some of the interactions some big tech firms have with governments.
There’s a lack of basic understanding amongst authorities though, right?
Correct. It’s a very valid point. Governments are already behind and yet change is occurring faster and faster. They need to stay ahead. When you look at AI, and this will affect all of us if it doesn’t already, governments need to be involved in setting the agenda, not catching up with it.
And at the expense of businesses that do more within their community.
It’s easy to tax a restaurant. They have employees on the ground, a physical store, and I don’t suggest restaurants shouldn’t be taxed, but the system needs to be fair.