A Man of Numbers
by Jason Caddy
Allan Henderson is co-owner and founding director of The McGinty’s Group and he’s happily hands-off because it gives him a critical helicopter perspective of the Aberdeen-based business and its nine venues.
Said Allan, “I’m not a hands-on publican, and I know that this will surprise many. I don’t pour pints in any of my premises. I’ve never poured a pint in any of my premises.
“I did economics and accounts at university so I was brought up with numbers and come from an accountancy background. Numbers will always be the driver. But it’s the discipline behind them – the margins, wages, projections based on sensible sales and not pie in the sky, profitability, buying, or whatever. At the end of the day, business is rewarded for risk. I am bolshie. I wish I had a pound for everybody that told me that will never work. But I had a vision and hopefully, we’ve delivered on it.”
“My pals call me the delegator so I have the luxury of being able to take a step back and think about how we can do it better. I’m steering the strategic management of the business, like weekly management meetings, monthly board meetings. My accountancy background means I’m used to the discipline of running a business.”
McGinty’s Meal An’ Ale, The Stag, No. 10 Bar & Restaurant, Ferryhill House Hotel, The Fourmile, The Silver Darling, The Esslemont, Macs Pizzeria, and The Grill make up its nine-strong portfolio of bars and the company came about in 2009.
His fellow directors, Alan Aitken (Operations), Derren McRae (non-exec and founding director) and Jillian Miller (Marketing) also have shares in the business, while Allan Henderson also heads up a contract catering business called The Workshop UK Ltd.
The McGinty’s Group is always on the lookout for new opportunities – and Allan feels that the next few years will generate many more of them because of the current situation.
“In the next couple of years, there are going to be hundreds of opportunities for operators in the wake of the pandemic. Unfortunately, I don’t think that everyone will make it so there will be places that are quite frankly bought for a song.
“In general in Scotland, obviously there are the big guys, but the majority are family-run places where they just operate one hotel, pub, restaurant and they don’t want to move from that because they don’t feel they can transfer their skills from running one successful outfit to running two. That’s fine. But I think you must be bolshie to grow.”
He recognises that the hospitality machine has moved on and become a lot slicker in the last few years and this means moving with the times or risk being left behind.
“In the old days all a pub had to do was stick a sign outside and it would sell lager. It’s a very different world now with social media and customer engagement and building a brand more cleverly rather than ‘come to us for a meal.’ Those days are gone. You need to build a customer base, engage with them and know how often you should communicate with them – importantly with the right offering.
“And it’s not always about price. When I look at some of the biggest fails in the trade, I feel a lot were price-driven. By halving the price of things they maybe did get more customers but all they did, in the end, was lose more money.”
Allan believes that continual investment must be strategic rather than throwing money at refurbishments for the sake of it.
“The most important thing is investing in your sites. We’ve been in this business for 13 years, and I’ve witnessed businesses round about me being complacent, not upgrading their toilets, not upgrading their front-of-house. We have continued to invest but sensibly, not just for the sake of throwing money at it but to improve the end product.”
He’s also proudly customer focussed and invests in the right kind of people because he believes they do things differently compared to other operators. And despite the current challenging circumstances, Allan remains upbeat about retaining his workforce in a market where labour is scarce because of the double-whammy of Covid-19 and Brexit.
“We have a different attitude to staffing to other hospitality operators. The vast majority are full-time, we don’t rely on the student market and encourage a lot of internal staff promotions between sites, and I put that down to a good culture that we run as a business – we aim to create a real family community.”
“There’s also fewer Europeans applying for jobs and I don’t know whether that’s Brexit and pandemic, or both. I don’t know what the balance is quite honestly. Obviously, people have gone back to their home countries because of the pandemic and I think that the press is too quick to throw in the Brexit word too easily. I think it’s a factor, but I think it’s down to the pandemic more so, however it’s difficult to tell with both happening at the same time.”
But while all this is of high importance, it’s the customer experience that is at the heart of everything The McGinty’s Group does.
“At the end of the day, our business is about customer service. Everything comes down to this. It’s about making sure that you employ the right staff that are happy to go the extra mile for our customers and business. There will be challenges because there is less labour out there to employ and some hospitality businesses will be more directed to employ those they perhaps wouldn’t have employed in the past, so that means it’s really important that the training is up to scratch.
“We do some external training but we very much like it to be in-house in the main. Partly because we want to extend the culture across our business, and secondly it allows our managers the opportunity to incorporate our preferred way of service and our passion for hospitality. It comes from directors and senior managers and percolates down.”
How has he steered the business through the pandemic and the constraints of social distancing and what’s his view on how the Scottish and UK governments have handled things?
“We were employing just shy of 250 before the pandemic and we are back up to around 230 so we’re not far short. With the current restrictions, the wet bars just don’t make any money. They’ve re-opened but it’s still very difficult and I don’t see wet bars becoming profitable until social distancing is behind us.”
“Obviously the grants and the furlough scheme has been very well received but you also have a situation where the hospitality industry has been burdened with excess restrictions that other businesses such as retail haven’t had and I think that the reasons hospitality has been subject to these deeper restrictions are, and to be absolutely frank, false.
“We were the only country in the world to ban music which affected the atmosphere and the wider customer experience of a venue which in turn impacted footfall during an already extremely challenging time for venues.
“We took on CBIL (Coronavirus Business Interruption Loan) and used the furlough scheme across our businesses which was needed just to protect the businesses. We were fortunate in that we went into the pandemic with a strong balance sheet right across the business so we had a solid company base. I worry about many businesses that don’t have a strong balance sheet and now have loans to repay and building debt and I think that their future prospects are going to be difficult.”
Allan is very optimistic about business bouncing back based on early indications and what he sees as customers’ willingness to spend money although profits have still been hit very hard of course.
“Our restaurants are already bouncing back even though they’re operating at only 60 to 70% capacity. They’ve been busy, people have got money in their pockets, there’s a propensity to spend, and the built-up cash reserves the Bank of England has been talking about in the past year, we are seeing that in people’s willingness to spend a bit more when they’re out.”
Allan strongly feels that it’s important that operators keep their venues open even if they’re not making money.
“I’m not going to say that we’re making money doing these things but what we are doing is protecting the business. I’m not a fan of the businesses that have chosen to stay closed. I would rather be trading at 60 to 70% of the normal business, knowing that once we get back to normality, it’s easy to move from 70 to 100 than it is from zero to 100. I think it’s been a worthwhile step for us, despite some of the short-term losses. I think that this protects your business more in the long term.
He’s also worked closely with Aberdeen council, who he says have supported the trade.
“We’re seeing consistent levels of high bookings and I only see that continuing. In terms of trends, we can see a move to more outdoor venues and we were very fortunate that Aberdeen Council worked very closely with the licensing premises to ensure that as many as possible had that opportunity.
“This has allowed us to trade back to somewhere near normal levels while we have restrictions indoors but also allowing places that couldn’t trade indoors to at least have a facility to trade and keep staff in place.
But despite all the challenges the pandemic has thrown at the business, Allan says that the biggest issues affecting his business are more historic.
“The biggest issues affecting my business are the ones that were here pre-pandemic. The business rates system in Scotland is not fit for purpose. We’ve never been approached by the government to enter into any sort of discussion about it. They just need to act and do something about it.
“Something like 60% of council services in Aberdeen are paid for by business ratepayers. So in effect, businesses are unjustifiably subsidising these local council services, and if you go down to Glasgow or Dundee, the figure’s far nearer 30 – 35%.
He’s also quite pragmatic about adapting the business further and embracing sustainability, for example.
“The Deposit Return scheme is going to be another chore for businesses but that’s the way businesses must operate. We must all go green. There’s no point in complaining about it. You just have to get on with it. This is the environment we work in now and I always say that if it’s raining, put up an umbrella. Let’s not just complain.
“Those in charge of buying in the business are switched onto sustainability, whether that’s a chef and a food producer promoting it, packaging, heat and light, it’s so relevant in every part of the business now.”
Does he have his eye on expanding the business beyond his beloved Aberdeen and into places where he feels that he could shake things up a little?
“We’ve looked at a few places. We have a policy of not opening up to near to our existing places so I think there are opportunities to move south and north. I know the highlands get a great name for hospitality and vast numbers of tourists, and I do feel there’s untapped opportunities for example in Inverness for our style of venue but time will tell.
The group is also seen as a bit of a rescuer, resuscitating places that nobody else would touch and turning them around.
“We’ve developed a bit of a reputation for taking over places that were on their last legs and then transforming them. No. 10 is a perfect example.
We looked around and saw that bars were offering traditional pub food and a couple of high-end restaurants so we went for the gap in the middle. Sometimes it’s best not to follow what your competitors are doing it’s better to go your way and identify your own space.
“The Stag had lost its way, was closed for three years, had a bad track record with the police and we paid a very small amount of money for it and within three weeks it was trading at a million pound a year. We recently converted part of The Fourmile into a coffee shop and that’s worked very well out there and given us another string to our bow.
And Allan has some pretty strong views on how we should be marketing our national drink.
“In 2018 we bought The Grill, which is Aberdeen’s favourite whisky bar. It’s an iconic bar in the city, which was owned by the same family for 50 years and already it’s benefiting our other bars because the whisky expertise in that bar is being dripped into our other places.
“I’m a great believer that for a country that has a fantastic product like that, we’ve not done as well as we should have to market it internally. Anytime I see whisky marketing it always seems to be focused on the foreign market, and I think there’s a real opportunity to market it domestically.”
Allan also sits on a few boards in a non-executive capacity because he wants to give something back to his hometown – and lobby on behalf of the hospitality industry.
“I am a really proud Aberdonian. I love the city. I am also a great believer that in business we should do our pro bono. Bill Gates will give away his billions but for mere mortals like me, it’s perhaps easier for me to spend my knowledge.
“I chair the board of Directors of Aberdeen Business Improvement District (BID), Aberdeen Inspired and I’m also on the board of Visit Aberdeenshire and these are non-executive positions and I feel that it’s about giving a little bit back to your area. It also helps expand my own knowledge, and meet key people in the industry. I have only recently joined the board of Visit Aberdeenshire so I am yet to get my teeth into that but I am hoping I can bring a wealth of experience to this role and my passion to better our city.
“I want to improve staycations, lobby for lower VAT, lower business rates, etc. Hospitality standards have improved but they could be even better and I think that’s down to the quality of staff and how they are treated. I am a big advocate for treating them well.”
His final word was as strident as ever – lamenting our deserted city centres and how this is decimating hospitality with no resolution or plan in sight.
“What is getting missed by the Scottish government is that all this encouragement to get people to work from home is dangerous talk. It’s dangerous for city centres that are already struggling and anything that discourages people from going in and spending money in coffee shops and cafes is a poor thing for the city and retail. Surely this is something that needs to be knocked on the head and the entire business community needs to stand up and fight for that.”