Jamie Oliver re-focuses on the core
The CEO of celebrity chef Jamie Oliver's business empire, Paul Hunt, has been busy re-focusing on the core, according to an article in The Times today. This follows a “full review of the businesses to concentrate on those that can deliver the Jamie Oliver message the best”. I expect the focus is will also be on those businesses that can make the most money.
What can we learn from this re-jig of the Jamie Oliver brand recipe?
1. Focus on the core
Paul's strategy has allowed Jamie Oliver to re-focus on the dual-core at the heart of its business model:
1. TV and publishing part: this creates the Jamie Oliver brand reputation and distinctive properties and is doing well, with revenue up 21% in 2014 to almost £40 million. This creates the "mental availability" for the brand.
2. Jamie's Italian: this chain of casual dining outlets, which is also healthy, with sales up 7% to an impressive £107 million, and pre-tax profit (before new openings) stable. This creates the "physical availability" for the brand on the high street.
Not bad for a guy who started out as a pastry chef eh?
Importantly, these two businesses are areas where Jamie and his team have developed business models that give them the "ability to win" and make good money. Second, each also directly builds the Jamie Oliver brand, as the chef's name and identity are "baked in" to the proposition.
Beyond driving distribution by opening more Jamie's Italians, "Core range extension" has also been used , to offer a smaller "format" of Jamie's Italian, called Jamie’s Italian Trattoria.
2. Kill the "dwarf" businesses
"Dwarf" businesses are those which are doomed to always be small. They divert time, effort and money away from the core. In Jamie Oliver's case, several of these have been killed off:
– Jamie at Home: a Tupperware-type model using agents to sell homeware like pots and pans at parties
- The Jamie Oliver collection of sauces, biscuits and jams
Closing down the holding business for these ventures, JME, involved a write-down of £9.4 million.
In addition, a £7.2 million hit came from closing two of the three Recipease cookery schools with cafés, as reported here.
It seems the "size of the prize" for these businesses was not enough, with the JME business had been loss-making for several years. Just as importantly, the company had less ability to win here. The new ventures didn't leverage the business competences from either of the two core businesses (TV/Publishing and Casual Dining). And the markets in question were highly competitive.
3. Be ruthless to follow the money
My guess is that it was hard to kill off the non-core businesses described above. First, there was the financial hit of £16.6 million in write-downs. But there would also have been an emotional loss from killing off new business ventures that carried Jamie Oliver's name. Sometimes you need an outside person to come in as Paul did to take a long, hard look at the business and "follow the money". This can't have been easy for Paul, given that he is married to Jamie's sister!
In conclusion, the new recipe for success at Jamie Oliver shows the benefits of re-focusing on your core business, where you have not only a good concept but also the ability to win.
